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Good morning! It's Tuesday, November 14th. Today, we are looking at how Garmin reclaimed billion-dollar revenue after nearly being taken out by Apple and its GPS-equipped smartphones!

THE FEATURE

How Garmin Survived Apple Maps and Generated Billions

By the early 2000s, Garmin GPS systems were adopted by so many consumers that it made paper maps a thing of the past. 

Despite being the first company to bring GPS tech to consumers, tragedy struck Garmin in 2007 with the release of the iPhone and Apple Maps.

In 2013, Garmin was worth less than a third of what it was in 2007. However, the company today is valued at over $20B!

Let’s figure out how Garmin survived the wave of Apple smartphones by finding new niches to expand into!

So, What’s the Business?

One of Garmin’s two founders is Min Kao, who was originally an engineering student in Taiwan and graduated from the University of Tennessee with a Ph.D. in electrical engineering. He went on to work at Magnavox and then King Radio to develop GPS-enabled avionics for the Federal Aviation Administration. 

It was at King Radio that Min met his engineering colleague Gary Burell. While the two were working on GPS tech for military use, they became obsessed with its potential for use as a consumer product for pilots, boaters, drivers, and hikers to help them navigate successfully and efficiently. 

They founded Garmin (a combination of Min and Gary’s names) in 1989 with $4M from their personal savings and loans from family and friends.

Their first product was the flagship GPS100, priced at $2,500 per unit. Since it was a new technology, it was still extremely expensive to produce, and the two founders worried that their newly founded company would never get off the ground. 

Luckily, they found a lifeline from Min’s past military contractor connections. The US military was more than happy to pay a premium for handheld GPS devices, which kept Garmin afloat while Min and Gary worked overtime to produce more affordable models. 

In 1995, Garmin’s sales reached $105M with $64M in profit and had a clear path towards exponential growth. By 2007, Garmin’s sales reached a stunning $3.18B!

However, the same year the company reached peak sales, Steve Jobs announced the iPhone equipped with GPS capabilities. Investors saw that this made Garmin’s products obsolete and redundant, leading the stock price to drop from a high of $117/share in 2007 all the way down to $20/share in 2009.

But today, Garmin has reclaimed its $21B market cap and reached a record $4.86B in revenue last year!

How They Win: Persist and Pivot

Garmin made its big turnaround in 2013 when it turned its focus away from transportation and toward the fitness industry. By 2015, their fitness smartwatches were so popular that 70% of participants in renowned marathons, like the Boston Marathon, wore Garmin watches. 

Apple did launch the Apple Watch in 2015, but Garmin is still the leading producer of smartwatches priced over $500. 

While many expected the Apple Watch to tank Garmin’s stock value, it turns out their smartwatches are very different from one another. The Apple Watch does come with fitness tracking capabilities, but it’s mainly focused on interfacing phone applications with a wearable device. 

In terms of utility for hikers, bikers, marathon runners, and any other sports enthusiasts, nothing can beat Garmin. Min and Gary revived their company by finding a new area to innovate with their cutting-edge GPS tech and have profited greatly as a result

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