Apple Inc. (AAPL): How Is Garmin Ltd. (GRMN) Still in Business?

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The company has an entire division — Nike Digital Sport — dedicated to wearable devices. Earlier this year, Nike rolled out a developer API with the goal of creating an app ecosystem for Nike’s budding tech platform. Nike has also created a start-up accelerator aimed at “leveraging the Nike+ platform,” and in May, Nike announced that it would invest in 10 start-up companies.

The next version of Nike’s FuelBand is rumored to include, among other things, support for these third-party apps as well as a heart-rate monitor. If that’s the case, Nike’s digital ambitions could prove to be an existential threat for Garmin Ltd. (NASDAQ:GRMN)’s fitness division.

In addition to the threat posed by Nike, there has been much speculation regarding an Apple Inc. (NASDAQ:AAPL) smart watch, which could be yet more competition for Garmin Ltd. (NASDAQ:GRMN)’s Forerunners.

Investing in Garmin
While one might’ve expected Garmin Ltd. (NASDAQ:GRMN) to have fallen by the wayside, strong automotive demand and growth in its other product categories have pushed shares higher over the last two years.

Still, longer-term, Garmin Ltd. (NASDAQ:GRMN) appears to be facing major challenges from Apple Inc. (NASDAQ:AAPL) and Nike. Apple’s iOS in the Car could take a bite out of Garmin’s automotive/mobile division, while Nike’s budding digital platform could wreck havoc on Garmin’s fitness products.

Cumulatively, those two divisions represent almost 60% of Garmin Ltd. (NASDAQ:GRMN)’s revenue and about half of its operating income. Garmin investors, then, should keep a close eye on these developments. They might not represent a threat to Garmin right now, but the company appears to be facing major long-term challenges.

The article How Is Garmin Still in Business? originally appeared on Fool.com and is written by Sam Mattera.

Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Apple and Nike. The Motley Fool owns shares of Apple and Nike.

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