GPS Devices Take a Back Seat: Garmin Ltd. (GRMN), Apple Inc. (AAPL)

I’m not saying Apple is the only company creating struggles for Garmin, after all even Apple had issues with its GPS feature just a few months ago. Despite these struggles, the iPhone has still managed to capture over 50% of the United States smartphone market share. Google Inc (NASDAQ:GOOG) has captured approximately 75% of the market share worldwide, which means iOS and Android devices account for approximately 91% of cell phones currently in use. These devices have GPS capabilities that create substantial competition for Garmin.

Google’s market share is 61% of Apple’s, but the company has 4% more institutional ownership than the iPhone developer. Yes, Google derives most of its revenues from ads, but still managed a 32.4% increase in revenues from a year ago.  Surprisingly, Google’s gross margins fell from 65.2% to 58.9%, but are 15% better than Apples and 9.9% better than Garmin’s. Google’s EPS fell over 10% in 2012, while its net margins fell over 20%.

The Foolish Bottom Line…

With smartphones playing such a huge role in people’s everyday lives, I would be cautious of companies like Garmin. Yes, I expect them to stay afloat, but will likely struggle in areas outside of their aviation and marine segments. Apple and Google have both performed well and I expect them to grow even more. I would recommend to stay away from Garmin at the moment, as it struggles to figure out its competitive advantage.

The article GPS Devices Take a Back Seat originally appeared on Fool.com and is written by Tyler Wofford.

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