Garmin is prepared to leave the smartphone business if the company does not see some light at the end of the tunnel in the next couple of quarters. In the second quarter, smartphone sales totaled $27 million, which missed the company’s expectations, Reuters reports.
In an interview with Reuters (NYSE: TRI), Garmin CFO Kevin Rauckman said: “We’re pragmatic. If we end up ultimately not successful with units…we’ll have to sit back and evaluate that and consider making the best decision for our business. We’ll have to make decisions within the next couple of quarters — whether we continue to invest or whether we pull back.”
Garmin is making phones based on the Android operating system, and in partnership with Taiwan’s Asustek as smartphones replace the need for standalone navigation devices. The business got even more competitive when Google (NSDQ: GOOG) said it would start offering turn-by-turn navigation for free on Android devices, which led to Microsoft (NSDQ: MSFT) and Nokia (NYSE: NOK) doing the same. In order to consider the business a success, Garmin estimates it would have to sell about a million smartphones a year. It is currently selling the Garmin-Asus Garminfone through T-Mobile USA for $99 on contract, or $450 off contract.