Garmin Leading a GPS Market Hit by Economic Slowdown

ROCKVILLE, Md. --- Two recent ChangeWave surveys conclude that Garmin is dominating both the consumer and the corporate GPS space. However, the combination of lower profit margins for Garmin and a retrenchment in U.S. consumer spending raise serious issues for the global positioning system manufacturer, ChangeWave said.

The first ChangeWave survey focused on consumer GPS trends and included 3,773 respondents. The second was on corporate GPS purchasing and included 2,013 respondents. ChangeWave's February 18-25 consumer GPS survey shows Garmin with a 56 percent market share among respondents -- a 4 percentage point increase since the previous survey in January. Garmin's percentage towers over its closest rival Magellan, which captured only 12 percent.

In the February 11-15 corporate GPS survey, Garmin continues its reign as the dominant leader with a hefty 58 percent share of the corporate market. That's a full 11 points higher than the previous survey in November 2007.

Going forward it's more of the same, with Garmin dominating planned corporate GPS purchases for the second quarter with a 56 percent market share. That's a huge 10-point jump since November. Magellan takes second with 10 percent (up two points), while TomTom limps in at 5 percent (down seven points).

"Clearly, the 800-pound gorilla of the GPS market is Garmin," said Tobin Smith, founder of ChangeWave Research and editor of ChangeWave Investing. "No other GPS maker has managed to map such a successful course in both the consumer and the corporate markets."

However, Wall Street analysts say the combination of significantly lower profit margins for Garmin (down more than 15 percent) and a retrenchment in U.S. consumer spending has undermined Garmin's share price.

That retrenchment was also the key finding of ChangeWave's most recent consumer survey. The results showed that two in five U.S. respondents (39 percent) say they'll spend less over the next 90 days than they did a year ago, five points worse than the January 2008 survey.

The decline in spending was occurring across all income levels. But most ominously -- not only for Garmin but for the entire GPS devices industry -- the survey showed consumer electronics spending in the midst of a major slowdown. To put this in perspective, it's the weakest outlook for electronics spending ever recorded in a ChangeWave survey.

"Given such a slowdown, it's understandable why Garmin and so many other high-flying electronics stocks have had an extremely rough go of it lately," Smith said.

But despite shrinking profit margins and an extremely tough consumer spending environment, the two ChangeWave surveys show Garmin remains the clear dominator in both the U.S. consumer and corporate GPS market.