Garmin 2005 Annual Report Download - page 45

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15
Garmin’s Europe, Middle East and Africa consumer segment marketing is handled through in-country
distributors who resell to dealers. Working closely with Garmin’s in-house sales and marketing staff in Romsey,
U.K., these distributors are responsible for inventory levels and staff training requirements at each retail location.
Garmin’s Taiwan-based marketing team handles its Asia marketing effort.
Instrument Flight Rules (“IFR”) products are sold through distributors around the world. Garmin’s largest
aviation distributors include Sportsman’s Market, Tropic Aero and JA Air Center. These distributors have the
training, equipment and certified staff required for at-airport installation of Garmin’s most sophisticated IFR
avionics equipment. Visual Flight Rules (‘‘VFR’’) equipment, including handheld GPS receivers, are also sold
through distributors and through catalogs.
In addition to the traditional distribution channels mentioned, Garmin has many relationships with original
equipment manufacturers. In the consumer market, Garmin’s products are sold to certain automotive OEM’s such
as Chrysler/Mopar, Toyota and Volvo and certain rental car companies including Dollar/Thrifty and Enterprise.
Garmin has also developed promotional relationships with certain automotive dealerships in certain countries
including BMW, Mazda, Saab and Ford. Garmin’s products are also standard equipment on boats manufactured by
Allison Boats, Bennington Marine, Cigarette Racing Team, Inc., Cobalt Boats, G3 Boats, Premier Marine and Pro
Sports Boats and are optional equipment on boats manufactured by Chaparral Boats, Inc., Cruiser Yachts, Formula
Boats, Glacier Bay Catamarans, Inc., Mastercraft Boat Company and Pro-Line Boats. In the aviation market,
Garmin’s avionics are standard equipment on aircraft built by Cessna Aircraft Company, Cirrus Design Corporation,
Columbia Aircraft, Diamond Aircraft Industries, EADS SOCATA, Eurocopter, Mooney Aircraft Corporation,
Raytheon Aircraft Company, Robinson Helicopter, Tiger Aircraft, LLC and The New Piper Aircraft Company.
Other aircraft manufacturers offer Garmin’s products as optional equipment.
Competition
The market for navigation, communications and information products is highly competitive. Garmin
believes the principal competitive factors impacting the market for its products are design, functionality, quality and
reliability, customer service, brand, price, time-to-market and availability. Garmin believes that it generally
competes favorably in each of these areas.
Garmin believes that its principal competitors for portable automotive products are TomTom NV, Thales
Navigation, Inc. (“Thales”), Alpine Electronics, Inc., Lowrance Electronics Inc. (‘‘Lowrance’’), Cobra Electronics
Corporation (“Cobra”), Navman NZ Ltd., a subsidiary of Brunswick Corporation, (“Navman”), Mitac International
Corp. (“Mitac”), Navigon AG (“Navigon”) and Sony Corporation. Garmin believes that its principal competitors for
handheld recreational product lines are Thales and Lowrance. For marine chartplotter products, Garmin believes that
its principal competitors are Raymarine Ltd. (“Raymarine”), Furuno Electronic Company (“Furuno”), Navman, the
Standard Vertex Division of Yaesu Co. Ltd. (“Standard”), Simrad and the Northstar Technologies unit of Brunswick
Corporation. For Garmin’s fishfinder/depth sounder product lines, Garmin believes that its principal competitors are
Lowrance, Raymarine, the Humminbird division of Johnson Outdoors, Inc., Navman, Simrad and Furuno. For
Garmin’s general aviation product lines, Garmin considers its principal competitors to be Lowrance, for portable
GPS units, and Honeywell, Inc., Avidyne Corporation, L-3 Avionics Systems, Meggitt PLC, Rockwell Collins, Inc.,
Universal Avionics Systems Corporation, Chelton Flight Systems and Free Flight Systems for panel-mount GPS and
display units. For Garmin’s Family Radio Service and General Mobile Radio Service product line, Garmin believes
that its principal competitors are Motorola, Inc. (“Motorola”), Cobra and Audiovox Corporation. For Garmin’s
personal digital assistant product line, Garmin considers its principal competitors to be Palm, Inc., Mitac, Navman,
Medion AG, Navigon, Hewlett-Packard Company, Acer Corporation, Dell Computer Corporation and Toshiba
Corporation.
Research and Development
Garmin’s product innovations are driven by its strong emphasis on research and development and the close
partnership between Garmin’s engineering and manufacturing teams. Garmin’s products are created by its
engineering and development staff, which numbered 709 people worldwide as of December 31, 2005. Garmin’s
manufacturing staff includes manufacturing process engineers who work closely with Garmin’s design engineers to