Asus Takes on the iPhone

A year ago, GPS device-maker Garmin announced with some fanfare that it was developing a touch-screen phone that doubles as a location-based personal navigation device.

It was beginning to smell of vaporware until today. The company announced it is teaming up with Taiwan-based pc maker Asustek to roll out not one, but several “nuviphone” models this year.

One might still take this with a grain of salt, since the companies would say only that the first model is due in the first half. They also offered few specifics in a press release on its cost or whether there’s even carrier interest in them.

But don’t tune out just yet. The execs are Asus are those clever folks who pioneered the netbook category of cheap stripped-down laptop pcs.

They tackled the crowded pc market by coming up with something so simple, at the right price points, that a surprising number of consumers are snapping them up around the world.

Now they’re betting they can beat Apple, Nokia, Samsung and other mobile industry bigwigs by closely tying in location-based services to the phone’s core functionality. According to the company’s press release, the first nuviphone will come preloaded with maps and millions of points of interest that allow drivers to quickly find a specific street address, or an establishment’s name.

If done right, the GPS functionality also could allow “look-ahead” functionality to help you pick a good restaurant or hotel while on a road trip. The nüvifone also features Ciao!, a social networking application that “bridges the gap between multiple location-based social networks and integrates them seamlessly into one device.” Translated, that means they figure they’ve got the best way for you to stay connected (and snoop on) your friends’ comings and goings.

The device itself looks like a winner. I saw the nuviphone last year, and it’s a gorgeous touch-screen device that seemed to operate well in the brief demo I was given. The user interface was simple and easy to use and the programs offered snappy load times.

Of course, a lot will depend on the pricing for the device and for the data plan, as well as which carriers, if any, will pick it up.

Where does Apple come in? Despite its phenomenal success, the smartphone category still is up for grabs. Apple’s iPhone strength has largely been a U.S. phenomenon. That’s not to be taken lightly, since it’s a huge market. And its secret sauce is the App Store, which has attracted thousands of developers.

But its weaker traction outside the U.S., coupled with the global economic crisis that has people holding onto their phones longer, could leave the folks in Cupertino vulnerable to other market players on a global basis.

Why? The more time competitors have to come up with something that works just as well as the iPhone, the worse it will be for Apple.

And there are going to be plenty, from the looks of it. Palm is making its comeback bid with the Palm Pre and WebOS operating system. There’s expected to be a slew of Google Android-based phone announcement in the next two weeks, and now the pcs makers are trying their hands at the mobile business.

Even Intel is getting back into the business, betting it can steal some thunder for new mobile Internet devices, or MIDs, based on its Atom processors.

Can Apple stand strong against the withering assault?

Before it's here, it's on the Bloomberg Terminal.