Google’s GPS announcement tanks TomTom and Garmin shares

It was a gloomy day on Wall Street for investors in proprietary GPS services today, not just because of the soaking rain in New York.

News hit this morning that Google is offering a free, turn-by-turn navigation service on Motorola Droid phones starting next week. Consequently, shares of Garmin tumbled 17% while TomTom’s shares fell 21%. In a post about the announcement and subsequent stock dive, the Business Insider linked to this post by John Gruber where he predicts more woe for companies like TomTom and Garmin:

The biggest objection is that the dedicated devices store all the map data locally. That’s great, and I’m sure it’s essential for some people. But the writing is on the wall. Google is entering the field. Their service is going to be free. It is going to improve constantly. Surely, eventually, map data will be stored (or at least cached) locally on devices. Soon enough, Google’s service will be both free and superior. Garmin and TomTom are toast.

Indeed, Google does have a habit of owning stuff like this, and Google’s pitch in the video below (which is oddly reminiscent of a workplace sexual harassment PSA) looks pretty awesome. Google’s search by voice feature looks pretty handy, and it appears that Apple and Google are collaborating on bringing it to the iPhone as well. Google also reports that the data used will be stored in the cloud, using Google Maps and real-time information to make GPS navigation even more accurate.