August 27, 2009 / 5:29 PM / 9 years ago

UPDATE 1-Garmin picks US carrier for smartphone

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By Savio D’Souza

BANGALORE, Aug 27 (Reuters) - Garmin Ltd (GRMN.O) has chosen a wireless carrier for its long-awaited navigation-enabled smartphone set for a fourth-quarter launch in the United States, but the navigation device maker stopped short of naming the company.

“All we have said is that we have signed a contract. We have not named who that contract is with,” Garmin spokeswoman Jessica Myers told Reuters by phone.

Several media outlets and blogs have reported that AT&T Inc (T.N), which also carries Apple’s (AAPL.O) iPhone, had bagged the rights to carry Garmin’s smartphone, called the nuvifone.

Myers declined to comment on the reports as well as which carriers Garmin had been in discussions with, but confirmed that the nuvifone G60 — built in partnership with Taiwanese PC maker Asustek (2357.TW) — is set to be launched in the United States later this year.

The phone, originally announced in January 2008, will be available through a carrier in the U.S., while in the Asia-Pacific and Europe, it will be available through carriers and retail channels, Myers said.

Garmin is betting on the smartphone to turn its fortunes as its bread-and-butter personal navigation device (PND) segment faces a threat from smartphones that offer navigation for less money than a subscription to a PND service. [nBNG469452]

Garmin had previously said it expects nuvifone to add about $100 million to $200 million to revenue annually. Earlier this month, Chief Financial Officer Kevin Rauckman said he still expected the amount to be within that range.

Rauckman had also said the nuvifone would not have positive margins this year given the low volumes, research and development costs, and advertising costs.

    Asustek has set a modest 2010 shipment target of 1 million units for the smartphone, underscoring its vulnerability as a new player in the sector. [nTP89495]

    Global sales of phones equipped with GPS chips, which use satellites to pinpoint the location of the user, is projected to grow a healthy 34 percent to 77 million units in 2009, according to research firm Strategy Analytics. [nLS717457]

    Multiple delays before a launch in Taiwan late last month could have dented the nuvifone’s chances in the hyper-competitive market, where it goes head-to-head against established leaders like Nokia NOK1V.HE, Research In Motion’s RIM.TO BlackBerry, Taiwan’s HTC (2498.TW) and the Apple iPhone.

    The G60 smartphone, to be sold under the Garmin-Asus brand names, runs on the Linux operating system, offers location-based services, turn-by-turn navigation, and sports a camera that automatically geotags images with exact latitude and longitude references of where the image was taken.

    Shares of the company were almost flat at $31.81 in Thursday afternoon trade on Nasdaq. (Reporting by Savio D’Souza in Bangalore; Editing by Anne Pallivathuckal and Unnikrishnan Nair)

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