Garmin Takes Huge Risk With Smartphone

Garmin's smartphone strategy is in line with the company's goal of expanding into newer markets, says Reiner. Garmin started by offering marine GPS units, expanded into aviation, outdoor and fitness segments and finally into navigation systems for automobiles.

The handset market is naturally the next step. "What they are trying to do is exploit a niche that they believe is not being addressed," says Reiner. "There are a lot of handsets that have GPS functionality but we have really not seen any phone that offers turn-by-turn dynamic navigation as the heart of the device."

Initial reviews for the Nuvifone have been mostly positive, with the device's user interface gathering praise. "It's obvious that the device is very GPS-centric with tons of icons for applications to help you find nearby points of interest," according to a blog poster in Laptop magazine who played with the device at the ongoing CommunicAsia conference in Singapore.

But given the economy and coming competition, Garmin will need more than a few positive reviews to win over consumers -- and win back investors.