Princeton FRS 142 - The Business of Being Garmin

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The Business of Being GarminGPS IndustryGarmin – The HistorySlide 4Garmin – NowProducts Galore!Automotive GPSAviation GPSMarket LeaderMarket Leader - Financestangent: $(grmn)$CompetitionFighting BackPlans for 2004Garmin in the NewsImplicationsReferencesThe Business of Being GarminFRS 142: Where’s Waldo? The Science and Application of the GPS System4/12/2004Jonathan LewGPS Industry$4.7 billion market for GPS receivers in North AmericaExpected to double by 2008Military originsCivilian GPS users outnumber military 100-to-1“In the coming years, every car may use GPS, while handhelds and cell phones are moving in that direction, too. GPS isn’t just for boats, planes, and hikers anymore.” – The Motley FoolGarmin – The HistoryTwo employees fed up with their company1989: founded ProNav1990: GPS 100Operation Desert Storm1991: GPS 100 AVD1994: 19 different receivers, including handheldsGarmin – Now2021 employeesMore than 120 different products“Built and sold millions” of GPS receiversMarket value at $4.6 billionOutsources littleListed on nasdaq: grmnProducts Galore!Automotive GPSUnprecedented potentialDominates the $170 million business for aftermarket GPS receiversBut automakers are building receivers into dashboardsAviation GPSControls an 80% share of the civil avionics businessG1000 – integrated avionics systemADS-B: Automatic Dependent Surveillance – BroadcastMost profitableMarket LeaderConsumers bought 2 million GPS handhelds in 2002, more than half were Garmin madeIntroduced 22 new productsBrand name recognitionFinancials!Market Leader - FinancesProfitable since first product in 1991Incredible 40% operating margins and 32% net profit marginsCash and investment hoard: $525 millionGrowth: 2002 sales revenue up 31% in Europe, 51% in AsiaEmployment in the face of downturntangent: $(grmn)$2003: shares rose 86%Strong financials$.50-per-share annual dividendPrice? – P/E ratio: 26.41CompetitionTraditionally: Magellan, Cobra ElectronicsBig names entering the market: Sony, ToshibaSiRF TechnologyDropping pricesReduced marginsFighting BackBarriers to entryPurchasing UPS AviationMarket niches: iQueUsing its market position and brand nameResearch and DevelopmentPlans for 2004Continue its customer-driven focusGPS integrated units: iQue 3600Automotive Navigation: technologyMarine Products: color, price, mapsHandheld Receivers: pricing, entry-level usersWireless: mobile phonesGarmin in the NewsMar 25th - “Garmin Offers Anglers a Boatload of New Lake Maps”Feb 12th - “Garmin Unveils the Foretrex 201 – a Hands-Free GPS Device”Feb 24th - “Garmin’s G1000 Integrated Avionics System Aboard the Hondajet”ImplicationsCompetition is good for the industry–Lower prices–More innovation–More efficiencyWho will shape the GPS industry of the future?Referenceshttp://www.garmin.comhttp://www.fool.com“Taking the World by Hand; Garmin rules the hot GPS business. But for how long?” – Arik Hesseldahl, Forbes, 2003, 172(9)“For those on the run” – Angela Forgeron, National Post, 27 December 2003 “Garmin” – Datamonitor Company Profiles, 2003, 3 March“Tech Trader: Will Garmin Lose its Way?” – Bill Alpert, Barron’s, 8 March 2004“Garmin shares may fall, hit by rivals” – Total Telecom, 8 March


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