One GPS maker’s route from gadgetry to the Internet of Things

Garmin sold $1-billion (U.S.) worth of GPS devices for automobiles last year, and also sells fitness and outdoor devices. (Daniel Acker/Bloomberg)

You may wonder – I do – why anyone would buy a GPS device for their car, when a smartphone and an app seem to do just fine. Yet Garmin Ltd. still managed to sell around $1-billion (U.S.) worth of the things around the globe last year.

The bad news for Garmin is that sales number was more like $2-billion in 2007, the company’s peak year of profitability (as measured by return on equity, per S&P Capital IQ).

The good news is that the company has largely remade itself as a maker of a wide range of connected devices for both consumers and commercial customers. The company’s fitness-device business, launched a decade ago, now makes up 20 per cent of the company’s sales. Add in other outdoor products, as well as sophisticated GPS for airplanes and boats, and Garmin has taken automotive GPS devices down to about 40 per cent of sales, from nearly 75 per cent in 2007.

In doing so, Garmin has also made itself a stock pick for those interested in the Internet of Things (IoT), the concept of a whole array of physical devices connected to the Internet, gathering and sharing data, and helping us make better decisions. Some IoT gadget makers, such as the company behind the Nest thermostats, have already been snapped up by big companies (à la Google) before they could sell their shares to the public. Others, such as active-camera maker GoPro Inc., trade at multiples befitting the hype stage of IoT (a forward P/E of 34).

Garmin, by contrast, has a forward P/E of around 15 – and yet it’s roundly unloved by Wall Street, with just five of 20 analysts rating the shares a “buy.” This, even as the shares trade closer to a 52-week-low than a high.

What’s the problem? Well, there’s the concern that the Apple Watch and other yet-to-be-introduced devices and apps will eat away Garmin’s fitness and outdoor business, making them fade just as badly as its auto GPS sales have.

With the current growth numbers, however, that day may be a ways away. Investors who think Garmin can remain a player in the field should be intrigued by the shares.

For the bull case, we turn to Mark Sue of RBC Dominion Securities’ U.S. research arm, who notes the $568-million in sales in 2014 for Garmin’s fitness business was 60 per cent higher than the year prior. This year should see 30-per-cent gains, he says.

Gross margins – revenue minus the costs of the product – were 63 per cent in the first quarter of 2015. Competitor Fitbit, which plans an IPO this year, reported gross margins in 2014 around 50 per cent. And despite the Fitbit competition, average selling prices for Garmin’s devices increased in 2014 versus 2013, Mr. Sue said.

What about that declining automobile GPS business?

Well, fitness should help cancel that out, with Mr. Sue expecting flat overall sales in 2015, a small gain in 2016, and single-digit growth in earnings. Importantly, fee cash flow should be steady, he believes, supporting share buybacks and a dividend, recently increased, that yields 4.5 per cent. He has a target price of $58, or 18 times his 2016 earnings estimate of $3.30 a share. (Garmin closed Thursday at $46.03.)

What’s the downside? Mr. Sue sees it at $44, if revenue declines 11 per cent this year and margins and profit follow. To introduce a more bearish view, however, we’ll cite Jeremy David of Citigroup Global Markets Inc., who cut his rating to “sell” in April, with a $42 target price.

Mr. David likes to look at Garmin’s business in two pieces, not the four segments the company uses: Sales to original equipment manufacturers (OEMs) of boats, planes and cars who embed Garmin systems in their products, and sales to consumers who buy the dashboard devices and the fitness products. Mr. David believes Garmin’s OEM revenue, about 30 per cent of the company, will grow at a 6 per cent annual clip through 2018. But the consumer business, about 70 per cent of the company, will decline by about 4 per cent per year, he believes.

His even more bearish scenario? Look to BlackBerry, he suggests.

Yikes! That sentiment is likely what’s holding back Garmin’s valuation. If the company can successfully navigate the next wave of devices, however, investors may find a path to profits.

Oculus Rift Partners with Microsoft, Announces New Games and Controllers

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While E3 may not have started quite yet, Oculus has jumped the gun and unleashed an amazing slew of new information about the Oculus Rift, including some very interesting partnerships.

During the Oculus event, we found out that Oculus (which, you may remember, is now owned by Facebook) has entered into a major partnership with Microsoft and multiple video game companies. It will be able to run on Windows computers and stream games from the Xbox One – outside of Sony’s in-house VR system Morpheus, this is one of the biggest pairings between VR goggles and game consoles.

The event also unveiled the final version of the Oculus Rift that will release in 2016, which is even sleeker than ever before, finally approaching something closer to “ski goggles” than “strapping a computer to your head.” It uses two OLED screens and a bunch of tech to create smooth, realistic images, as well as an option to adjust the width of the screen for your eyes.

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Rather than create its own gaming control, Oculus will be using its partnership with Microsoft to great effect and providing an Xbox One gamepad with every Oculus Rift, right there in the box along with a wireless adapter to help connect it to Rift games. Even current games like Halo and Sunset Overdrive will be able to be streamed to the Rift for a more immersive experience – they just won’t have any true VR effects.

For those who want to stay away from an Xbox controller, Oculus has another solution, the Oculus Touch. This is a handy pair of controllers – a tiny bit like the Nintendo Wii used but with very different shapes – that you hold in both hands, each with a joystick and a couple trigger buttons. Using the built in camera, the Oculus Rift will be able to track those controllers as they move and even recognize certain gestures.

Among the games announced for Oculus Rift is EVE Valkyrie with its space battles, Edge of Nowhere from Insomniac Games, Chronos from Gunfire Games, and a handful of other exciting games from studios like Square Enix and Harmonix. Hopefully we’ll see more about these games at E3, as well as in the future: Oculus is creating a $10 million grant program (thanks, Facebook!) to encourage indie developers to create their own VR ideas.

Gadgets this week: Eye-tracking VR headset to WaveKat…

Smartphones are getting smarter and users getting more connected. For those who want to get your homes and appliances hooked on to smartphones and are not hesitant to try out soldering and a bit of basic electrical work, Switcheroo promises to get you connected for just $27. And for those who simply do not want to be connected, a new project on Kickstarter promises to take users back to the basics with a feature phone that can only make calls and nothing else.

On the other end we have the new kids on the block – the VR headsets that are gaining centre stage. The latest one comes with an eye tracking feature. Read on:

Fove – eye-tracking VR headset

Virtual reality headsets are getting into the mainstream sooner than expected dispelling fears that it could go the way the Google Glass did.

Facebook has already announced that it plans to retail the Oculus Rift starting 2016.

Fove, a new startup has come out with what could well be the world`s first eye tracking virtual reality headset. Users will be able to control the device using their eyes simply by staring, focusing or blinking at it.

For gaming enthusiasts, the device could become very handy as they will soon be able to navigate, shoot without their hands.

The device reads eye movements to allow more precise control in video games, enabling users to target, aim and shoot with true line-of-sight targeting. Even the scenery will blur and sharpens according to the part of the screen you are focusing. Users will be able to look laugh, and communicate with virtual characters just like in the real world.

The device also enabled head tracking. The high resolution display offers 00 degree field of view is PC compatible and users will even be able to convert existing VR games and develop more advanced features.

The project has already raised $273,267 of the $250,000 goal. You can still pre-order a device for $349 as part of the early bird offer. The device is expected to deliver in May 2016.

WaveKat – the ultimate toy for watersport enthusiasts

This is for the water sports enthusiasts. Imagine if you could go-kart on water – the latest version of WaveKat P70 lets you do just that. The watercraft is able to perform 90º turns while continuing at high speed of 35+ knots (65kph).

The asymmetric catamaran hull, the manufacturers say will help provide stability, speed and control in waves or flat water.

What`s more you don’t need to be a pro to master the driving. All you need to do is get into it and start driving. It comes with a foot throttle and steering when controls.

Ideal for beach resorts and water sport companies, it can also be bought by individuals and is priced at $22,500.

Switcheroo – creating a smart home for just $27

This gadget can turn every other device into a connected device. You no more need to spend thousands of dollars to convert your home into a smart home. All you will need is a $29 connecter that will enable you to control toys, unlock doors, start your car, turn on lights, open or close the garage door, even control your AC or heating system and upgrade any device with a pushbutton.

All you need to do is to connect the switchboard of anything that has a switch to open or start to a switcheroo and it will use the circuit to take the place of that switch or act in concert with it, upgrading these devices to allow direct smartphone control.

The Switcheroo has 4 outputs that can switch DC voltages from 2 to 24 volts, up to 150mA of current per output. “For AC voltages or higher current applications you can connect relays or solid state switching ICs to Switcheroo and do even more,” the developers of the product noted.

Switcherro connects to your smartphone using Bluetooth and, therefore, you have to currently be within the range to be able to actuate the functions using your smartphone.

What`s more, a switcheroo can operate on a single coin cell battery for up to a year or connected to a regulator.

Users can either create an open mode whereby anyone will be able to connect to the Switcheroo and control any of the outputs or create a closed secure mode whereby outputs can only be controlled after sending an authorized access code.

The project currently on Kickstarter has raised $12,853 of its $18,000 goal.

The Light Phone – the phone away from phones

The Light Phone is another Kickstarter project that promises to provide you a calling experience that no other smartphones can do – distraction free. That’s possible simply because the phone can only be used to making calls and nothing else.

“We are not creating technology; we are using the best existing technology in a new way. we have stripped away everything but the phone itself,” developers Joe Hollier and Kaiwei Tang said.

It’s a credit card-sized phone that easily fits into your wallet and “designed to be used as little as possible…..” the description adds.

The device has a volume control, a simple LED screen display, a slot for mini SIM card, a micro USB port and a speaker and a microphone and weighs about 38.5 grams.

The battery obviously lasts for almost 20 days. The device is, however, priced at$100 and is expected to ship by May 2016.

Charge all of your gadgets at the same time with one intelligent USB port [69 % 0ff ]

The Insider Picks team writes about stuff we think you’ll like. Business Insider has affiliate partnerships so we may get a share of the revenue from your purchase.

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Somehow — and isn’t this pretty much always the case? — there are more devices on your desk that need charging than there are available USB ports. There’s your work cell, your personal smartphone, and your laptop. Oh, and a tablet for good measure.

This scenario applies to many of us, which is why tech companies like Skiva have engineered solutions. Its convenient, four-port charging station is an affordable and effective one that lets you juice all of your stuff at the same time.

The station is compatible with any USB-powered gadget, and it comes equipped with intelligent detection that will automatically recognize your device and deliver fastest possible charging speed. It also features “built-in over-heat, over-charge, over-current and over-voltage protection,” which makes it safe to use even at high power output of 48 watts. The nearly 70% discount is a solid selling point, too.

SmartQuad 4 Port USB Charger, $24.99 (originally $79.99), available at Amazon. [69% off]


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Digital Currencies a Big Test for Regulators, Says New York Banking Czar

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New York’s powerful banking regulator Benjamin Lawsky said Wednesday that digital currencies like Bitcoin pose a major challenge, but should not be stifled.Lawsky, the outgoing superintendent of the state’s Department of Financial Services, said finance industry watchdogs have to accept that cyber-currencies are here to stay, and could have “a profound impact” on payments technologies and the financial system over the coming decade.

“Financial regulators and policymakers need to recognize that when it comes to digital currencies and other new payments technology, the genie is already out of the bottle.”

“The pace of change is only going to accelerate in the years to come. And regulators need to be ready to meet that challenge.”

Lawsky, who polices one of the world’s most powerful banking centers, Wall Street, has pushed quickly to set up regulations for companies dealing with digital currencies, on the basis that like banks they are involved in money transfers.

The final version of those regulations was released Wednesday. Under the tentative version last month, DFS issued its first license for a Bitcoin exchange, to New York City-based itBit Trust Co.

Speaking to a technology forum of the Financial Services Roundtable in Washington, Lawsky said he didn’t even know what a Bitcoin was before 2013.

“At first, the whole concept struck me as a little bizarre,” he said.

But over time he recognized its importance and the need to regulate it like banks, to protect consumers and battle fraud.

Lawsky held back from predicting how the industry would evolve, though noting that the cryptography which underlies the Bitcoin system represented a “major advance” that “could have significant applications in a multitude of areas.”

For that reason, he said, “The emergence of digital currency and other new forms of payments technology represent an important test for financial regulators.”

“There might be at the very least a kernel of something here that has a profound impact on the future of payments technology and the financial system.”

“Regulators are not always the experts on such matters, but my gut now is that it’s likely,” he said.

At the same time, “We should not react so harshly that we doom promising new technologies before they get out of the cradle.”

Google’s Project Soli to Bring Radar-Based Gesture Recognition to Wearables

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One of the big problems with wearable devices right now is inputs – there’s no simple way to control these devices. At Google I/O 2015 the company unveiled Project Soli – a radar-based wearable – that can be used to control all kinds of devices. Developed by Googles Advanced Technology and Projects (ATAP) team, Project Soli can be incorporated into a range of different devices.

It’s a gesture based system that can track small movements like waving your fingers – it could be an easy way to control wearables, or even give you have hands-off control of your phone. It could also allow you to enter text on a smartwatch without restricting you to the small screen.

Essentially, Project Soli is a radar system that’s small enough to fit into a smartwatch. It can pick up on movements in real time, and the movements you make alter its signal. It can detect swipes, or making a fist, or crossing fingers.

You can see the full explanation in the video below:

Using your hand to interact with a device is typically much more accurate than working with voice recognition – and according to this video, Project Soli is sensitive enough to track “micro-motions” – unlike something like Microsoft’s Kinect technology, which is not as precise. Unlike other systems that use cameras, Soli uses radar which has much higher sensitivity, so it could be used for gestures like pressing a button, moving a slider, or turning a knob.

We’re still in the early days of this technology, and it will take a couple of years before it is available commercially, but it could eventually replace voice commands as the best way of interacting with devices.