Global Positioning System (GPS)

The Global Positioning System (GPS) is a satellite-based radionavigation system owned by the United States government and operated by the U.S. Space Force. While we know it as the friendly blue dot on our smartphone maps, for an investor, GPS is one of the most significant and underappreciated economic forces of the last half-century. It is a foundational “platform technology”—a free, reliable, and globally available utility, much like the internet, upon which countless modern industries are built. From optimizing an Amazon delivery route and enabling precision farming to synchronizing global financial transactions and making the ride-sharing economy possible, GPS is the invisible engine driving immense efficiency and innovation. A savvy value investor looks past the consumer-facing app to see the deeper story: a powerful undercurrent that helps great companies build powerful and durable business models.

You can't buy shares in GPS itself, as it's a public good provided by the U.S. government. The investment opportunity lies in the companies that harness its power. The key is to think of GPS as a massive, free highway system in the sky. While the government maintains the road, the real value is created by the businesses that use it to deliver their goods and services better, faster, and cheaper than the competition. For a value investor, the goal is to identify these businesses—the ones that leverage GPS not just as a feature, but as a core component in building a wide and deep economic moat. The magic isn't in the satellites, but in the profitable innovation they enable on Earth.

GPS's economic impact is layered. Investors can find opportunities at each level of the value chain, from the companies that build the infrastructure to those that simply benefit from its existence.

These are the “picks and shovels” companies of the GPS revolution. They design and build the physical infrastructure that makes the entire system work. This is a high-tech, high-barrier-to-entry sector.

• Aerospace and Defense: Companies like Lockheed Martin or Northrop Grumman build the multi-million dollar satellites that form the GPS constellation. These are often long-term, government-funded contracts.
• Semiconductors: Companies like Qualcomm and Broadcom design the sophisticated, low-power GPS chips that go into every smartphone, car, and tracking device. Their expertise and intellectual property form a significant moat.

These companies integrate GPS technology directly into their products and services, making them more valuable to the end-user.

• Automotive: Car manufacturers use GPS for in-dash navigation and are a critical component for developing autonomous driving technologies.
• Consumer Electronics: Think Apple and Samsung. GPS is a standard feature in smartphones, watches, and other wearables, enabling a vast ecosystem of location-based apps and services.
• Industrial Specialists: Companies like Deere & Company use hyper-accurate GPS for “precision agriculture,” allowing farmers to plant seeds and apply fertilizer with centimeter-level accuracy, drastically increasing crop yields. Trimble Inc. is another leader, providing GPS solutions for surveying, construction, and logistics.

This is often the most fertile ground for investment. These companies don't make GPS hardware, but their entire business models would be inefficient or impossible without it. Their use of GPS is often a key source of their competitive advantage.

• Logistics and E-commerce: Giants like FedEx, UPS, and the entire global supply chain rely on GPS for vehicle tracking, route optimization, and delivery confirmations, saving billions in fuel and labor costs.
• The On-Demand Economy: The existence of companies like Uber, Lyft, and DoorDash is entirely predicated on the ability to precisely locate drivers and customers in real-time.

When analyzing a company, the question isn't simply “Do they use GPS?” but “How does GPS help them build a durable competitive advantage?”

Look for how GPS contributes to a company's fundamental strengths:

• Cost Advantage: A logistics company that uses GPS-powered software to create the most efficient routes will have structurally lower costs than its rivals.
• Switching Costs: A farmer who has invested heavily in a brand's ecosystem of GPS-guided tractors and data analytics software is highly unlikely to switch to a competitor, creating a sticky customer base.
• Network Effects: Ride-sharing apps use GPS to create a powerful network effect; more drivers in an area attract more riders, which in turn attracts more drivers, creating a virtuous cycle that is difficult for new entrants to break.

No technology is without risk, and it's crucial to understand the potential vulnerabilities associated with GPS-centric investments.

• Geopolitical Risk: GPS is ultimately controlled by a single entity: the U.S. military. While it's operated as a global utility, this centralization is a source of geopolitical risk. Alternative systems (Europe's Galileo, Russia's GLONASS, China's BeiDou) provide some redundancy.
• Systemic Dependency: The modern economy's deep reliance on GPS means any significant disruption—whether from solar flares, cyberattacks, or military conflict—could have widespread and unpredictable consequences.
• Commoditization: The value is constantly moving up the stack. Basic GPS receiver chips are now inexpensive commodities. The durable economic value is no longer in the hardware itself, but in the sophisticated software, data analytics, and unique services that use location data to solve a customer's problem.