How Garmin survived the iPhone and started growing again

Garmin was once a rising star in consumer electronics, with its personal navigation devices a common sight on car dashboards and in hikers' backpacks.

The company's heyday — roughly the late 1990s to around 2008 — ended with the birth of GPS-enabled smartphones from Apple and Google, which offered convenience and features like real-time traffic data Garmin didn't have. 

But the Kansas-based tech company has orchestrated a successful second act by building niche businesses in smartwatches, navigation for boats and airplanes and other segments. The company has even begun to rebuild its automotive business, but this time as direct supplier to automakers such as BMW. 

Garmin's revenue hit a peak of about $3.5 billion in 2008, but in one-year's time it fell to $2.9 billion, as the country plunged into a years-long recession. Garmin continued to struggle until about 2013.

The American economy recovered, but Garmin's dashboard navigation device business did not. Instead, since about 2015, the company has been growing by focusing on niche uses for its technology. Two big areas of growth have been fitness and outdoor, where it has a couple of lines of smartwatches aimed at serious athletes like marathon runners. 

Longbow Research analyst Nikolay Todorov looked at more than 50,000 data uploads from runners in major marathons, such as New York, Boston and Chicago, as well as events in Europe, and found more than 70% of participants using a watch were using one made by Garmin. They have actually grown share since 2016.

Over the past 12 months, Garmin shares have climbed 13% to about $96, as its investments have begun to pay off.

Its fitness and outdoor businesses have grown more than five times in size since 2009, aviation and marine have grown three times, Todorov told CNBC. But it has taken a while for the whole company to see growth, because the declining car dashboard device business had once been such a large percentage of the company's total sales. 

To sustain its new-found momentum, it will need to fend off competitors with innovation and continue to differentiate itself. For example, its smartwatches are known for their long battery life, which far exceeds that of the typical Apple Watch. They also have specialized apps that can collect a wide range of data for specific activities, such as surfing or mountain biking. 

"So they have really found themselves in niche sub-segments in each of those broader markets. They have focused on product quality and execution," Todorov said.  "And they have they're starting to reap up really good success."

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