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Garmin vs. TomTom: The GPS Battle

Posted By: on February 16, 2013
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Garmin

The stand-alone GPS market has been shrinking for the last couple of years, and that trend is likely to accelerate into the future.  More phones and PDAs provide basic GPS functionality, and fewer consumers see the need for yet another $100 to $400 device.  That’s making the marketplace far more competitive, which is great for consumers who want a good GPS system for a reasonable price.

This battle has two main players – Garmin and TomTom – and three key features.  There’s a great article here comparing the features of the two systems.  Here’s a look at how the market breaks down and what today’s competition will mean for tomorrow’s consumers.

1.  Automotive Applications
GPS is perhaps most valuable in the car, and this is where the stand-alone GPS systems really found their niche.  Among those who spend a lot of time in their car – and especially those who have to navigate to unfamiliar addresses frequently – having a GPS system was as important as having car cleaning supplies, a spare tire, and a personalized coffee mug.  As a result, more car manufacturers have been building GPS into their rides, cutting deep into the stand-alone market.  Garmin still has the edge over TomTom here, due largely to a more readable interface.

2.  Competition from Phones
Although GPS radios in phones suck battery juice like vampires in a blood bank, GPS apps on phones are becoming increasingly prevalent and popular.  As their phones do the job better and better, consumers are becoming less willing to shell out a couple hundred dollars for another device.  In response, GPS makers have been rushing to build phone apps, hoping to salvage at least some revenue from that migration.  Here, TomTom is far and away the leader, probably because Garmin came to the iOS game disastrously late.

3.  New Markets
As old markets for stand-alone GPS systems are drying up, new markets are proving viable, and that will change the business model of both companies heading into the future.  Small devices with GPS functionality are becoming increasingly popular among fitness buffs (e.g., GPS watches for runners), and with the athletics industry enjoying robust growth it is a great place for GPS makers to invest their resources.  Garmin and TomTom are both relatively new to this market; both are gaining traction, but neither has established a clear advantage.

To survive in the automotive marketplace, both companies should go after automotive contracts, using their brand strength to ink deals to provide components for built-in GPS systems.  Competition for phone apps will continue and intensify, and in two or three years most consumers will probably get their normal GPS functionality from a Garmin or TomTom app on their phone.  The most intense competition will likely be for exercise-related products.  This is the hottest market for stand-alone GPS, and it’s also an industry that’s likely to grow, as awareness of the importance of nutrition and exercise drives more and more people toward exercise.

If you’re looking for a stand-alone GPS unit today, both Garmin and TomTom have great products.  Consumer Reports provides a helpful buying guide, but the decision will really come down to which interface feels more comfortable to you.

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