The personal navigation device (PND) market fell by 15 percent to 2.3 million units in Europe and 28 percent to 1.1 million units in North America during the third quarter, according to information supplied by TomTom. The Dutch company said that this led to steep discounting of GPS-enabled devices for fitness and outdoor as well as for the automotive aftermarket.

The drop in the PND market affected Garmin harder than TomTom. Garmin's sales in the automotive and mobile segments declined by 16 percent to $322.5 million during the quarter ended Sept. 28. Instead, the company's combined business in the outdoor, fitness, aviation and marine sectors grew by 12 percent to represent half of the company's total revenues of $643.6 million, which were down overall by 4 percent from the same period a year ago.

Garmin said that its revenues in the outdoor segment declined by 4 percent to $101.3 million because it was unable to replicate the strong results of last year's third quarter. Gross and operating margins remained strong within the segment at 69 and 44 percent, respectively.

A sales increase of 25 percent to $81.0 million was reported by Garmin for its fitness segment as all its products sold well, led by the Vector power meter end by Edge cycling computers. The gross margin declined by 3.7 percentage points because of the product mix, but the strong sales growth allowed the company to keep operating margins constant.

TomTom reported a sales drop of 11 percent in the automotive sector to €44 million, indicating a gain in market share, but the company suffered declines also in the other sectors, including a 12 percent decrease in the consumer segment to €151 million. Its total sales for the quarter went down by 11 percent to €244 million.

TomTom noted that its PND sales were flat in Europe, where it now claims a market share of more than 50 percent, and down in the smaller U.S. market. In the consumer segment, its revenues from fitness products showed strong growth as compared to the same quarter a year ago.

TomTom has introduced a new generation of PNDs in Europe, but both Garmin and TomTom have launched new products in the sports and outdoor market to diversify the range of their activities. After their initial introduction earlier this year, TomTom's consumer division started shipping its first GPS sports watch in the U.S. in July. It supported the launch with a communication campaign from the month of September. Following a wider roll-out, its sports watches are now available in 21 countries around the world.

Garmin introduced two new action cameras, the VIRB and the VIRB Elite, in the outdoor market during the latest quarter. The company says that they have brought new features to the action camera market including their integrated GPS, color displays, extended battery life, the integration of a fitness sensor and the ability to control the camera through a range of existing Garmin devices. They should contribute to accelerate sales growth in the outdoor segment during the present fourth quarter of 2013. Garmin has also introduced two new GPS running watches, the Forerunner 220 and 620, scheduled to be delivered in the fourth quarter.

Overall, Garmin managed to improve net earnings to $187.7 million in the latest quarter from $140.3 million a year ago, thanks to tax benefit, and the company has improved its guidance for the full financial year. While the gross margin went up to 55 percent, the operating margin stood at 24 percent. TomTom registered a 49 percent drop in net income to €11 million for the latest quarter. Its gross margin inched up to 56 percent, but the Ebitda and Ebit margins fell to 17 and 6 percent, respectively.