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Commentary
10/25/2010
02:50 PM
Eric Zeman
Eric Zeman
Commentary
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Garmin-Asus Headed For Divorce

The marriage of Garmin and Asustek Computers has been a rocky one, producing few devices, and none of them hits. Looks like the two will be calling it quits in the next few months.

Last week, DigiTimes reported that the Garmin-Asus tie-up was headed for splitsville. On Monday, Asustek confirmed the report, in part, saying that the company will end its mobile phone co-development business partnership with Garmin when the current contract expires.

In September, Garmin publicly stated that it was mulling the future of its Nuvifone smartphone business. Speaking in an interview with Reuters, Garmin Chief Financial Officer 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."

It follows, then, that Asustek would also mull ending its relationship with Garmin, with which it co-developed the Nuvifone and other devices. "It makes sense and it wouldn't be surprising should it prove true," Oppenheimer analyst Yair Reinersaid told Reuters.

The two companies brought the Garmin Nuvifone to the U.S. market via T-Mobile. The device went on sale in June -- after more than two years of delays. It was based on Android, and offered a navigation-focused experience. Despite the solid performance of the device, it failed to score well with T-Mobile customers.

According to Rauckman, the company's worldwide smartphone sales during the second quarter totaled $27 million. Neither Garmin nor T-Mobile said how many of the Nuvifones were sold.

Once the Garmin-Asus business partnership ends, Asus will be on its own to develop smartphones.

Asustek said that it will provide more information about the end of its business arrangement with Garmin on Tuesday, October 26.

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