Garmin 2008 Annual Report Download - page 37

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15
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 N.V. and
MiTAC Digital Corporation (which distributes products under the brand names of Magellan, Mio, and Navman).
and Navigon AG. Garmin believes that its principal competitors for outdoor product lines are Magellan and
Lowrance Electronics, Inc., a subsidiary of Navico Holding AS, (“Lowrance”) For marine chartplotter products,
Garmin believes that its principal competitors are Raymarine Ltd. (“Raymarine”), Furuno Electronic Company
(“Furuno”), Lowrance and Simrad Yachting AS (“Simrad”). For Garmin’s fishfinder/depth sounder product lines,
Garmin believes that its principal competitors are Lowrance, Raymarine, the Humminbird division of Johnson
Outdoors, Inc., 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, Rockwell Collins, Inc., Universal Avionics Systems Corporation, Chelton Flight Systems, Aspen
Avionics, 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 Electronics Corporation and Midland Radio Corporation. Garmin believes that its principal
competitors for smartphones are Apple, Inc., HTC Corporation, Nokia Oyj, Samsung Corporation and Sony
Ericsson Mobile Communications AB.
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 1,738 people worldwide as of December 27, 2008. Garmin’s
manufacturing staff includes manufacturing process engineers who work closely with Garmin’s design engineers to
ensure manufacturability and manufacturing cost control for its products. Garmin’s development staff includes
industrial designers, as well as software engineers, electrical engineers, mechanical engineers and cartographic
engineers. Garmin believes the industrial design of its products has played an important role in Garmin’s success.
Once a development project is initiated and approved, a multi-disciplinary team is created to design the product and
transition it into manufacturing.
Below is a table of Garmin’s expenditures on research and development over the last three fiscal years.
December 27, December 29, December 30,
2008 2007 2006
($'s in thousands)
Research and development $206,109 $159,406 $113,314
Percent of net sales 5.9% 5.0% 6.4%
Manufacturing and Operations
Garmin believes that one of its core competencies is its manufacturing capability at its Shijr, Jhongli and
LinKou, Taiwan facilities, its Olathe, Kansas facility, and its Salem, Oregon facility. Garmin believes that its
vertically integrated approach has provided it the following benefits:
Reduced time-to-market. Utilizing concurrent engineering techniques, Garmin’s products are introduced to
production at an early development stage and the feedback provided by manufacturing is incorporated into the
design before mass production begins. In this manner, Garmin attempts to reduce the time required to move a
product from its design phase to mass production deliveries, with improved quality and yields.