by Ryan Cole, Investment U Research
October 28, 2009
Google just changed everything… again.
The rumor that Google Inc. (Nasdaq: GOOG) might offer turn-by-turn GPS navigation has just turned into a reality, as the tech giant brought the feature to all Android 2.0 devices. For free.
Beginning September 17th, Google’s stock has jumped over 10%… while Garmin (Nasdaq: GRMN) has fallen almost 15% and fellow GPS provider TomTom (AMS: TOM) is off a stunning 38%. The latter has fallen 24% today alone.
The markets have decided: Google just killed stand-alone GPS navigation. After all, why pay $300 for a navigator when you can get it free on your phone?
Of course, not everyone owns an Android phone, and it’s unclear when Google will roll out the feature to other operating systems.
Still, Google has promised such a roll-out in the future for devices with the hardware capable of handling the software. Yes, probably even Apple‘s (Nasdaq: AAPL) iPhone along with a few others… eventually.
With the software providing turn-by-turn spoken directions, Google’s street view map and speech recognition – which allows users to simply say their desired destination to get a route – make it a killer app… literally.
It’s unlikely Garmin or TomTom can survive this without some very nimble repositioning.
Let’s be clear: Standalone GPS navigators will likely still have a niche, but it’s fast becoming a very small niche.
As Google rolls this software out to more and more phones – and more and more people buy smartphones – the standalone GPS will quickly lose its power in the consumer market.
In short, get out of Garmin and TomTom. They may bounce back a little from current lows, as investors realize this won’t be an overnight transition. But make no mistake: Both companies are in very big trouble.
Google, meanwhile, continues to expand its dominance of the digital world.