Does everyone need a Garmin?

GPS units used to be the territory of the rich and famous. Only available in the upper luxurious cars. A privilege for the few. This has changed very recently with the dramatic drop in prices for GPS units. The price for these portable units have been falling steadily. This past boxing day, there were some that were available in the 150-200 range. Open up a few flyers and you'll see that this isn't just a boxing day one day deal. These are slowing becoming regular every day prices. For the first time in a long time, GPS units are now affordable by ordinary everyday people.

So what does this mean for Garmin (GRMN), a company that is arguably at the forefront of hardware innovation when it comes to this field? With more mainstream adoption of GPS units, does Garmin really have more room to go higher? How would a recession impact things? Surely if people become dependent on the GPS, it'll become one of those things that they can't live without like the Internet or TV. Or is it?

Garmin did extremely well in 2007. They doubled their market cap in a single year and established leadership on the hardware front. Despite their high flying stock, things weren't always rosy. In November, competitor TomTom increased their U.S. market share to 31% while Garmin fell to 29%.

What does this mean? There is a lot of competition in this area. Times are tough. There is a risk that if Apple (AAPL) or RIM (RIMM) releases a product with integrated GPS, Garmin could be in big trouble.

In the event of a US economic slowdown, a one trick pony like Garmin might not be the safest bet. That being said, with all their recent success, I'm hardly bearish on them either. The field is highly competitive. With the right amount of marketing and innovation, it is really anyone's game in the GPS space.