Almost everyone is bullish on GPS-enabled cell phones. It's no secret the mobile phone market is going to seriously erode the standalone GPS market. If Garmin doesn't position itself as a leader in the mobile phone navigation sector, it's going to lose out. Big.  

But cell phone based GPS navigation is technologically tricky.  Hardware needs to be tuned to conserve precious battery life, and it can take years to smooth out the software bugs and user interface design. Developing a Garmin-powered cell phone navigator sooner, rather than later, allows Garmin to showcase its best-of-breed navigation software to consumers, wireless carriers, and hardware manufacturers alike. Even if nuvifone only sells a modest number of units, the device will likely still prove a loss-leader for Garmin. The company can take the lessons learned from nuvifone, refining and perfecting its cell phone based navigation software (and possibly creating a valuable suite of patents along the way).

Garmin could then theoretically be positioned to offer its navigation software as a value-added service to various carriers, or license the technology directly to the handset manufacturers. With enough marketing, Garmin could achieve Intel-like brand awareness (think "Garmin Inside"), and dominate an industry that has increasingly become commoditized. Most PND consumers today don't understand the value proposition one brand offers over another, and make purchasing decisions almost exclusively on price, falsely assuming that all PNDs will function similarly.

Investing the resources required to get ahead of the inevitable mobile phone GPS boom could be just what's required to maintain Garmin's lead in the GPS market.

According to press releases, the nuvifone will have a touchscreen display, mobile web browser, GPS navigation, cell phone, , video camera, MP3/MPEG4 player, pre-loaded maps of North America, Western Europe, or both, Google local search capabilities, gas prices, news, stock quotes, movie listings, and more.

Garmin's nuvifone will hit the streets sometime in Q3 of this year.  No word on pricing yet.