I went out geocaching today with my son. Geocaching is awesome. It combines three different activities that I love: hiking, treasure hunts and GPS electronics.

I have the Groundspeak geocaching app for the iPhone. It’s a pretty neat piece of work, leveraging the built in GPS to provide lists of caches nearby with full descriptions, maps and log entries. The app provides all the collateral info that I need to decide which cache to pursue, alleviating the need to do legwork on the computer before going out to geocache.

But when it comes to actually finding a cache under heavy tree cover, the app is no subsititute for a dedicated GPS unit. Today was typical. The app got us within 100 feet of the cache, or so the phone seemed to indicate, but the location kept jumping around. Lacking confidence that we were in the right vicinity, I entered the coordinates into my Garmin GPS 60csx, a three year old unit. The Garmin pointed me about 100 yards away. When I got to the location the Garmin centered on, the cache was about 20 yards away and easily visible.

Purpose-built devices will nearly always outperform general purpose devices. The only caveat to that is when the market for the general purpose device is so much larger that there are inadequate R&D dollars to fund a better purpose-built device.

Purpose-built devices are typically more expensive, especially considering that they do only one thing well, but if you need performance, you will buy a purpose-built device.

Photography and GPS are both under seige from the low end from smart phones. But in both, if performance is your primary criteria, then you will likely buy a purpose-built device. However, there are attributes of the general purpose device, in particular the network connectivity and UI that smart phones provide, which are becoming essential features of GPS devices and cameras. So if the manufacturers want to attract the performance-driven consumer, they will need to add those.

Case in point: my 7-yr old son was calibrating the compass on the 60CSx and tried to active the ’start’ button by touching the screen. Of course, there is no touch screen on the 60CSx, but he is so used to user interfaces being touch and intuitive that he would never think to hit a dedicated button. In his world, you point at what you want on the screen.

My son looking to touch the screen, only reiterates that the purpose-built devices better have the other basic features like networking and user interface worked out to be competitive.

Just to be clear, I am not saying that Garmin is not going to be hurt by smart phones. They will be hurt, but I suspect that they can continue to exist for quite some time at the high end of the market if they make the right investments. I would buy a dedicated Garmin GPS unit, based on Android, that was very accurate and could also provide me the information that the Geocaching app provides on the iPhone. How they will manage to get wireless data on there is another matter.

Also, I just want to make clear that this post is an update to my earlier post when the Geocaching app first shipped. Back then, I though I might be able to leave my Garmin at home for geocaching. True some of the time, but not for the harder caches.

Of course, the general purpose devices are not standing still. If the GPS performance gets much better, then Garmin will be squeezed even further into the high end.

Network connectivity does not yet enhance driving GPS navigators enough to make the iPhone a win there. The GPS implementation in the iPhone is slow to lock the satellite and is not well designed to use on your windshield.

Geocaching is a different story.

I have been geocaching for a few years now with my kids. For those not familiar with geocaching, it is a global treasure hunt where people hide little caches, list their GPS coordinates on geocaching.com, and then wait for people to find them. Geocaching is a lot of fun, and it can be challenging if you choose caches that include difficult terrain or a well hidden location.

To geocache, I would go to geocaching.com, find a cache that looks interesting, attach my Garmin GPS 60CSx, and download the waypoint for the cache, print out the description and hints, and then drive to the trailhead.

The 60CSx is an amazing GPS device. It is waterproof, durable, daylight readable and includes a magnetic compass so that it can tell you, even when standing still, how far away the cache is and in what direction to move.

Recently, Groundspeak, which runs Geocaching.com, came out with a Geocaching iPhone app. That app will find nearby caches based on your location, giving you the description, the hints and the ability to log field notes, all from the iPhone. You can navigate to the cache via google maps and once close by, use their simulated compass (only works when moving) to head to the hide location.

Geocaching is never quite as easy as it sounds. Even my Garmin will only isolate you to a 1000 square foot area, so you need to do some hunting. Hence, the limited accuracy of the iPhone GPS is a not a major liability. The Geocaching app on the iPhone offers an amazingly good Geocaching experience. You don’t need to plan ahead and load waypoints using a USB cable, and the built in maps support means that locally you can pretty much use Google maps on the iphone to get to the trailhead.

Of course, the iPhone is not as good a GPS device as my Garmin device, but the GPS part is good enough, and the supporting information and wireless network access to the data makes it more convenient. If a user already has an iPhone, then using it is cheaper (Geocaching app is $9.99) than buying a Garmin device. High end geocaching users probably won’t be satisfied with the iPhone geocaching experience, but it is cheaper and offers attributes the traditional solution does not. And its getting better fast. Does that sound like disruptive technology? You bet.

The iPhone is deeply disruptive to Garmin’s geocaching market. What’s worse for Garmin, they have no consumer-friendly way of adding networking to their handheld devices. They already learned that nobody will pay a subscription fee for their real-time traffic reports. They will find out that nobody will pay a subscription fee to get a data plan for their Nuvi either.

What is garmin to do? Well, to some extent, there is nothing they can do. they are going to lose the casual Geocaching market to GPS-enabled smart phones. They can try to come out with a smartphone, but this is pretty far from their knitting.

I think the only solution is to camp out at the high end and at least produce a device that is as useful as the iPhone for geocaching for those willing to pay. To do that, I would suggest they handle the data network access like the Amazon Kindle.

Rather than charge a subscription fee, let users browse for geocaches on the Garmin handheld for free. Then if the consumers wants to reveal the actual coordinates of the cache, charge a small transaction free of $1 that includes the cost of the network bandwidth. This is how Amazon handles the wireless charges for book deliver on the Kindle. Makes perfect sense.

I would be willing to pay a a small fee to get a superior GPS experience and all the ancillary geocaching information. The other obvious option is to try to create ad-supported wireless networking for the Garmin Nuvi. I doubt it would pay the freight today for access to the cell phone networks.

The iPhone (and other smartphones) won’t just disrupt the portable handheld Geocaching GPS market. They will also disrupt the point and shoot photography market for similar reasons (this is where Phanfare comes in). Canon is going to have a hard time getting consumers to pay a monthly subscription fee to get access to a data network to move their photos and video to and from the cloud, but that is exactly the convenience that smartphones are going to offer. And given that the trend is toward unlimited data plans, the bandwidth required is already sunk cost to the consumer.

Mobile photography is not very threatening to dedicated point and shoot cameras today and Canon is not much worried. Garmin is probably not seeing too many people forgo handheld GPS units for geocaching today either – but check back in two years. Things will be very different.