Research In Motion Ltd (BBRY), Garmin Ltd. (GRMN): Staying Relevant in a Smartphone Dominated World

If Garmin Ltd. (NASDAQ:GRMN) plays its cards right in these niche sectors, where smartphones cannot be practically mounted and used (aircraft, bicycles, boats), their sales and profit growth could help offset losses in its auto and mobile PND segment. In fact, Garmin’s aviation segment actually contributed 26% to the company’s total operating profit, up from 19% in the prior year. Meanwhile, its auto and mobile segment’s income contribution declined from 25% to 20%. This is a positive sign that Garmin can slowly back out of its auto and mobile PND business and focus on other markets.

Spending heavily to keep growing

Although Garmin Ltd. (NASDAQ:GRMN)’s growth in aviation and fitness is encouraging, the company has spent heavily to keep improving its navigation systems to stay on par with Google and other competitors. Operating expenses rose from $193 million to $196 million, with double-digit increases in research and development costs in its marine and outdoor segments.

As a result of this research, Garmin recently released new products, such as golf navigationwatches and dog tracking systems, which could also help it diversify away from its auto and mobile PND market.

The Foolish Bottom Line

Garmin Ltd. (NASDAQ:GRMN) has its work cut out for it in the coming year. It needs to prove that it can stay relevant in a smartphone-dominated world. Unpopular hardware, paid apps and HUDs aren’t going to cut it anymore. Garmin should focus on its core growth areas – aviation and fitness products – and avoid a direct confrontation with Google altogether. If Garmin manages to help these segments thrive, it could actually stand a decent chance of growing its top and bottom lines again.

The article Staying Relevant in a Smartphone Dominated World originally appeared on Fool.com.

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