SiRF Technology (SIRF), a San Jose, Calif.-based maker of GPS chips, this morning said it was cutting jobs and trying to restructure its business due to softening consumer demand. Already the worst performing tech stock for the year, shares of SiRF nosedived in early trading this […]

SiRF Technology (SIRF), a San Jose, Calif.-based maker of GPS chips, this morning said it was cutting jobs and trying to restructure its business due to softening consumer demand. Already the worst performing tech stock for the year, shares of SiRF nosedived in early trading this morning.

“SiRF experienced greater-than-expected softness in product demand from its customers, especially in the PND, or Personal Navigation Devices market,” the company said in a press release.

SiRF is the canary in the GPS coal mine. In other words, the GPS device market has hit the skids and we should expect more bad news, and more dominoes to tumble. Why? Look at SiRF’s customers: Tom Tom, Magellan, NAVIGON, Sony and European white-label GPS maker, Binatone. If the macroeconomic trends are putting a damper on SiRF and its chip-buying posse, it isn’t hard to extrapolate and see trouble for Garmin as well.

Looking further out onto the horizon, I think the standalone GPS device market is going to get cannibalized by mobile phones, which are getting increasingly sophisticated when it comes to personal navigation functionality. GPS devices were among the hottest-selling consumer items this past holiday season, with sales up 214 percent and revenues up 488 percent, respectively, year-over-year.

By Om Malik

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  1. Herman Manfred Tuesday, March 25, 2008

    I’ve never seen the real utility of a GPS device for the general public – sure, they’re great for those who have to travel to unknowns a lot but those types are down in the noise level. For the rest of us out here we do 99.999% of our travels over well-worn VERY familiar territory where a GPS device has GOT to be the most redundant and useless info source around.

    Watching rush-hour commuters who are taking the exact same route to work they take 250 times a year in their 4-wheel-drive SUVs that never see mud eagerly staring at their dash mount GPS devices is a constant source of amusement.

    And, of course and as noted in the article, places like Google offer Google Maps with cell-tower triangulation so even when that 0.001% GPS-need opportunity arises for the general public a quick glance at one’s cell phone satisfies the need to know where one is.

  2. Sirf StarIII chipsets are what brings the ultra-high resolution to modern GPS devices, so it’s sort of worrisome to see them announce that things aren’t going well.

    You’re probably right about seeing the personal navigation device market being killed by the mobile phone, but they will still require Sirf chipsets.

    The previous commenter is right – most people don’t need a GPS. It’s a luxury that provides some utility – maybe. It’s sort of the chicken and the egg thing – location based services will drive GPS purchases but that won’t happen until more people buy GPS devices.

  3. Curtis Carmack Tuesday, March 25, 2008

    I don’t think this is a harbinger of ills in the GPS world. The majority of SiRF’s malaise stems from its failed efforts in mobile TV. If you could strip that out of this news, I believe the fundamental’s of its GPS business are ok, if not great. Of course there is always downward pressure on prices, but since when is this not the case for a silicon based industry?

  4. I’m not convinced about the phone as a GPS device… especially whilst driving AND talking on the phone at the same time. Sure that’s a bad habit in and of itself, but many if not most folks have their phone at their ear when driving. Since the screen is pointing at your ear at that time, and audio directions would interfere with the phone conversation, having the integrated GPS is really not practical…

  5. Om,

    The GPS,mobile, and map technology industries are converging. I don’t think that GPS as we know it will come to an end. What I think is likely to happen (in fact i’ve expected it for some time) is that the core technologies behind GPS (of which Garmin is market leader with the largest patent portfolio) and mapping (Navteq, Telenav, etc.) will move into the Cloud. This convergence and migration will result in GPS services delivered to devices (cell phones, MID’s, and MP3 players) and vehicles as needed by the consumer. The primary consumer interface will be the browser.

    Sirf Technologies is seeing weakening demand for devices which need their chips, whereas Garmin and the rest of the GPS technology companies are seeing an increase in demand for GPS services.

    I don’t think the GPS party is over, I think it is about to rage. :-)

  6. Oh, this makes me sad. I am what you could call “Directionally Challenged”, which basically means I can’t find my way out of the parking lot half the time.

    I rely on my GPS system. I have a GPS in my phone but I never use it. Too small and I don’t have a place to mount it on the dashboard and it doesn’t talk to me like my Garmin does.

    Or did. Last weekend my Brand New Garmin was stolen out of our car. So it will be a few weeks of going around in circles until I can get it replaced.

  7. @DB, with new laws many more people are using BT headsets than before, so as long as the phone can make it easy to multitask it wouldn’t be an issue to continue a call while also using navigation on the phone. In fact, even many standalone units will display Caller ID information via BT when a call is received on your phone.

    But it’s definitely going to add to the number of distractions while driving, and it’s already clear that laws like no cellphones while driving are not very useful when there’s no enforcement (not to mention their questionable effect in the first place…using headsets doesn’t change the fact that you’re having a conversation which some people can handle while driving and some can’t)

    I can definitely see people using their cellphones for GPS navigation, as I currently do that with my Moto Q9C through Sprint’s Navigation service. And I’m sure the carriers love the subscription model.

  8. I am convinced as well that the mobile phones will dominate this field. For one they are smaller and easy to carry and they are also easier to use if you need to walk places on foot.

  9. I don’t see a phone, no matter how sophisticated, taking the place of a GPS system for the frequent user. For those who take 1 trip a year and can’t justify the GPS price tag, maybe. I’ve had my GPS for almost a year and what has surprised me the most is how much more useful it is than I ever imagined. Sure it’s great for trips to places I’ve never been before, but what a lot of people don’t realize is it really is useful for every day situations. It makes it very convenient to get around traffic jams when that route that you’re familiar with is impassable. Or when you’re on a side of town that you wouldn’t get lost in, but suddenly need to find the nearest ATM, bank, McDonalds, Walmart, etc. that you’ve never been to.

    Points of interest are probably the biggest feature that makes a GPS worth having for someone who doesn’t travel constantly. So when you see me on the way home from work taking the same route I always take and I’m staring at my GPS don’t assume I’m an idiot. I may just be looking for the nearest bank to get to before they close or a restaurant that I’ve never been to or a way around that wreck that you can’t see yet.

  10. I believe PND’s (Personal or Private Navigation Devices) have many benefits over cell phones. In most cases, GPS on cell phones cost $10.00 per month; HOWEVER, to use that service, you need “data” capabilities on your phone which can cost up to $40.00 per month. I for one, have no desire to surf the web on a 1.5″ screen, therefore, paying $250.00 (one time charge) seems to be a much better investment.

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