Garmin and SiRF Getting Lost in the Crowd

4/1 - "The biggest problem facing makers of PNDs is the boom in smartphones, which increasingly include GPS technology. Mobile phone-service providers such as Verizon(VZ - Cramer's Take - Stockpickr) and Sprint(S - Cramer's Take - Stockpickr) are offering phones from the likes of Nokia(NOK - Cramer's Take - Stockpickr) and Research In Motion(RIMM - Cramer's Take - Stockpickr) that feature increasingly sophisticated GPS functionality."

"In addition, the presence of GPS functionality in phones serves to aggressively commoditize the navigation function as it becomes just another feature consumers take for granted. As a result, we believe prices for standalone PNDs will have to come down substantially to keep consumers interested, which could take a hefty toll on profit margins and, consequently, earnings estimates of companies in this space."

"The world of consumer electronics can change rather quickly, and investors need to be aggressive in attempting to identify losing categories. Unfortunately, the GPS/PND category looks like a victim of the rapid evolution of the mobile phone, and thus, value traps like Garmin and SiRF should be avoided."