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How Far Could an Amazon Partnership Take Garmin?

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Garmin and Amazon teamed up on voice-enabled device

Mobile navigation systems maker Garmin (GRMN) has tied up with Amazon.com (AMZN) to launch a new smart speaker device aimed at the automotive market. Garmin’s Speak will be integrated with Amazon’s Alexa digital assistant.

As a result of this integration, drivers can use the Speak to receive news briefings, weather forecasts, and traffic updates—all hands-free, by simply speaking out voice instructions to the device. Additionally, Garmin Speak enables drivers to remotely access and control smart appliances in their home while behind the wheel.

Voice-enabled speaker usage to jump 130%

The tie-up between Garmin and Amazon comes at a time when recent studies have shown a rapid adoption of voice-enabled devices. According to Juniper Research, voice-powered devices will be installed in 55% US (SPY) households by 2020. Market intelligence firm eMarketer estimates that the use of voice-enabled speakers will increase nearly 130% this year in the US.

While early adoption of voice-powered speakers has largely been in homes, their uptake in the automotive market is also expanding, and this can partly be seen from the rise of automotive voice-control devices being launched. Soon after Garmin’s Speak launched, Speak Music also launched its voice-enabled device, Muse, as an add-on for the car. Like Garmin Speak, Muse is also integrated with Amazon’s Alexa for hands-free in-car controls.

The larger market for Garmin Speak

In the market for voice-enabled devices, Amazon is in the driver’s seat. According to eMarketer, Amazon will control 70.6% of the US voice-enabled speaker market this year, compared with 23.8% for Alphabet’s (GOOGL) Google. Apple (AAPL) and Alibaba (BABA) are also pitching to the voice-controlled devices market.

Given Amazon’s strong lead in the voice-enabled speaker market, this could provide a larger market for Garmin’s Garmin Speak device. In 3Q17, Garmin’s revenue grew 3.0% YoY (year-over-year) to $743.1 million, but the growth was slower than 6.0% YoY growth in 3Q16.

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