Garmin Q2 Results Are In; Earns $27M From Smartphones
Garmin has only recently become a player in the smartphone market, and a meager one at that. Having only previously released the Nuvifone on select carriers and to rather lousy results, Garmin made a second push into this increasingly crowded market this last quarter with its Garminfone A50 on T-Mobile and Nuvifone A10 on Optus in Australia. If you have been curious as to how many consumers scrambled to their nearest T-Mobile or Optus store to buy one, then your wait is over: Garmin released its Q2 financial results yesterday, and were less than appealing to say the least.
The financial results span a large variety of different types of Garmin products, most notably the company’s other PND offerings. In fact, it’s very easy to blink and completely miss the following statement by CEO Dr. Min Kao:
In the quarter, we also launched the Garminfone™ A50 with T?Mobile and the nüvifone A10 with Optus in Australia. Sales of our smartphone product category contributed $27M in revenue during the quarter. While this was below our plan, we are working aggressively with T?
Mobile and other carriers around the globe on the appropriate positioning and pricing of our devices in the competitive smartphone space.
Dr. Kao did a wonderful job of brushing over these embarrassing results rather fast so as to calm investors and analysts. But this is $27M in revenue we’re talking about — not profit, revenue. Dr. Kao admits this was “below our plan” and is working hard to remain competitive, and while it shouldn’t take the company much effort to improve its numbers (we’re not sure how it could get much worse, anyhow), we wonder what Garmin’s going to do to market and price its products in a way that consumers would want to choose them over more established competitors such as Apple, HTC or Blackberry, to name just a few.
Just to demonstrate exactly how horrifying a number $27M in revenue really is, I estimated the average revenue of a Garminfone to be around $300 and discovered that this means Garmin likely sold roughly 90,000 units during Q2 (keep in mind that this is a conservative estimate; it’s quite possible each unit brought in more than $300 in revenue, meaning even less units were sold). Not really enough to compete against a product made by Apple that preorders 600,000 units in one day and sells 1.7 million of them in a weekend, but look on the bright side — it’s better than nothing, right?