PND Inventories High, Sales Fell Short In Q4

By Amy Gilroy -- TWICE, 1/26/2009

New York — Garmin and TomTom confirmed that industrywide inventories of personal navigation devices (PNDs) are high following a lackluster fourth quarter that left retailers with stockpiled PNDs at all price points.

TomTom also reduced its estimates for industrywide 2008 North American retail-level PND sales to 17 million from 18 million.

“Inventories are higher than we’d like them to be,” said TomTom president Jocelyn Vigreux. “It will take a little time” before inventory levels are back to normal.

Garmin sales director Jon Peckman expects it will take until President’s Day to sell through inventory stock piles.

“There are a lot of $99 pieces out there. It will put pressure on second-tier suppliers,” Peckman added. “Those who were planning to build $99 pieces had better get to $69 because that’s what the market is going to want. If TomTom is $99 on the [Go One]125, you are going to need to have a game plan,” he added.

TomTom released the $99 Go One 125 for Black Friday. It’s similar to the current Go One 130, at $149 after rebate, but does not include maps of Canada. TomTom decided to continue the piece through December and was still offering it at press time.

The acknowledgements by TomTom and Garmin came at a time when industry members and analysts said they expect 2008 fourth-quarter sales to be flat or down compared with 2007’s fourth quarter. That stands in sharp contrast to the meteoric 400 percent gains experienced during 2007’s final quarter.

The economy, industry members contend, is the main reason. Sales were tracking about 130 percent ahead of 2007 as of July 2008, The NPD Group noted

Other signs of the PND market’s declining prospects in recent weeks include discounting and market consolidation.

Best Buy’s high-end 4.3-inch Insignia PND, launched in October with live Google search at $499, has been reduced in price to $199. The 3.5-inch version is now at $149, down from its original $399 launch price.

At International CES, Sony did not show any new PNDs for 2009, and Magellan was officially purchased by Mio parent MiTAC just days after CES. For its part, Mio is expanding into other GPS-centric products, including a netbook to retail for $299 in the fall.

Mio also said it took action to reduce inventories early in the fourth quarter. “We believed GPS would be soft, and we started allocating product far in advance. It was not very popular with retailers, but today there are more thank you’s,” said sales and marketing VP Jerry Barbera.

Garmin also said it began reducing inventories in September/October.