Navigation devices set to take mass market route

The company will sell a pink nuvi-branded device aimed at women in Europe during the fourth quarter and Gartner said its nuvi 200 series -- another entry-level product -- is being marketed as a contemporary and fun-to-use device for young consumers.

Garmin's C300 series, used in cars for navigation, has been its best-selling line this year, said Dougherty & Co analyst Jeff Evanson.

"You're starting to get below the price of an iPod and this provides a lot of value," Evanson said. He expects an upgrade of Garmin's C300 series later this month.

Garmin, which snagged an ad spot during the popular Super Bowl event earlier this year, sells devices priced from $300 to $1000.

TomTom launched the third edition of its entry-level TomTom One device in late August with a lower price point than its previous version.

TomTom investor relations officer Richard Piekaar said TomTom One is its best-selling device globally. He said the company develops every device on a 40 percent gross margin basis.

INVESTORS UPBEAT

A strong U.S. market for portable navigation devices has paved the route for Garmin shares to surge more than 92 percent since the start of the year. TomTom shares have leaped nearly 60 percent in the same period.

"Investor sentiment is so positive because Garmin is one of the best growth stories out there," JMP's Ebeling said.

JMP has forecast 30 percent year-over-year growth for Garmin in 2008, an "incredible" level for a company with about $3 billion in sales, she said.

Canalys' Chow said she expects the U.S. portable navigation market to reach about 20 million units by 2010, from only about 2.9 million units in 2006.