Business Blog: Hoover’s Business Insight Zone

This follows up on an item we ran last week: GPS device maker Garmin has withdrawn its $3.3 billion bid to buy digital map database maker Tele Atlas, which ends Garmin’s bidding war with rival location-device maker TomTom.

The key influence on Garmin’s move seems to be the supply agreement it worked out with its current map supplier NAVTEQ (and by extension with NAVTEQ’s purchaser, Nokia) to supply Garmin with digital maps for many years to come. Apparently in this case Garmin decided that it was cheaper and better to strike a long-term deal with its current supplier rather than try to buy mapmaking capacity for itself.

But long-term issues remain, especially this one: if I’m going to own a smartphone anyway, and if that smartphone has GPS and mapping capabilities embedded into it . . . why would I need a separate GPS device from Garmin or TomTom? For more on this angle of the story, check out our post from last week, as well as this Bloomberg story (which was written before Garmin dropped out of the bidding war). The Bloomberg piece raises the specter that Garmin may suffer the same fate as Palm as more consumers move to smartphones that integrate many functions.