GPS was once an obscure niche appealing to the military, boaters and pilots. But within the last few years the market for personal navigation designs has bloomed. Last year, unit sales of GPS devices grew by 235 percent, according to NPD Group. For Garmin, the cash flow is evident: its 2007 revenue is expected to surpass $2.9 billion, up 64 percent from last year. Its stock has doubled in 12 months, giving Garmin a bigger market capitalization than General Motors.

However, Newsweek believes there are many challenges in store for Garmin. As Garmin cuts prices to match competitors, its profit margin will likely shrink. Also, cell-phone manufacturers have been adding GPS to handsets, and they believe consumers may detour around Garmin in favor of carrying one lower-cost gadget. Finally, they believe Garmin will face hard choices now that TomTom and Nokia will own the two major mapmakers, Navteq and Tele Atlas.

"That's a key question for us," says Chief Financial Officer Kevin Rauckman. "Can we continue to be a premium brand?"

As for GPSMagazines' analysis, cell phone GPS units aren't very practical and Garmin is locked into a deal with Navteq for at least another 6 to 10 years. At least for the time being, it's going to continue to be a Garmin dominated market.

[Newsweek]