COBRA, GARMIM SQUARE OFF AT RETAIL ON HANDHELD GPS DEVICES
Intense battle in fledgling market for handheld GPS devices appears to be taking shape at retail as Cobra Electronics ships GPS-100 by midmonth, posing first major challenge to dominant supplier Garmin Industries.
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Cobra plans “soft” launch of product this year in limiting distribution to Best Buy and Circuit City, but already has cut prices, moving GPS-100 to $119 from $149 quoted at CES in Jan., and GPS-500, due in 3rd quarter, to $149 from $199. Best Buy and Circuit also carry Garmin product, least expensive of which is eTrex handheld GPS device at $119 at Circuitcity.com.
Cobra’s move into GPS counters Garmin push with its Rino GPS-equipped 2-way radios that have emerged as competitor in category in which Cobra and Motorola have long been dominant players. Cobra, which worked with Maxwood Technology in developing handheld GPS devices, has been hit by several delays in bringing to market product that originally was scheduled to ship last Aug. Most recent delivery dates for GPS-500 and GPS- 1000 of 3rd and 4th quarter, respectively, are delays from earlier scheduled 2nd quarter and summer. Cobra said it planned to promote product at Best Buy and Circuit City using co-op ad funds, but would avoid national push until full line was available. It’s forecasting $20 million in GPS-related sales in 2004, CEO James Bazet told analysts in conference call.
In entering GPS market, Cobra is incorporating 18 parallel channels into its products vs. standard 12 channels in most devices, and high-end GPS-1000 ($249) and GPS-500 ($149) will include Rand McNally mapping software. “We are taking a calculated and deliberate approach to ramping up GPS,” Bazet said, saying retail market for GPS products is projected to grow to $1 billion in annual sales within 5 years. Cobra also plans to deliver GPS devices for embedded OEM applications by early 2004, company officials said.
As Cobra expands into new category, it’s trying to shore up existing business. It reported Tues. that first-quarter net loss widened to $453,000 from $236,000 as revenue slipped to $20.5 million from $21 million. Downturn in revenue was partly tied to decision to halt sales of its 2-way radio through Kmart and Costco. Cobra radar detector sales also declined, partly offset by gain in CB radios. In light of wider loss, Cobra is targeting cutting costs by $1 million this year, reducing promotional and other expenses, CFO Michael Smith said. “We're also going to carefully examine who we do business with and on what terms,” he said. .
Garmin plans to start production of GPS-equipped Palm handheld PC late this quarter. IQue 3600 features 200 MHz processor, 32 MB memory, SD slot and color LCD with 320x480 resolution. It’s equipped with Garmin’s Que technology that provides, among other things, electronic mapping and automatic route calculation.
Garmin said first-quarter profit rose to $41.5 million as revenue jumped 23% to $123.8 million. Sales to consumers increased 28% in quarter to $95.3 million and to aviation industry 9% to $28.6 million. Gross margins improved to 60.3% from 54% year ago. Shipments increased in quarter to 446,000 units from 313,000. Company said 20% of sales in quarter consisted of products introduced within last 12 months.