Nautilus 2001 Annual Report Download - page 17

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greater financial and marketing resources, which may give them and their products an advantage in the marketplace.
We believe our Bowflex line of home exercise equipment is competitive within the market for home fitness equipment based on product design,
quality and performance and that our direct marketing activities are effective in distinguishing our products from the competition.
NAUTILUS SLEEP SYSTEMS. The sleep products industry is also highly competitive, as evidenced by the wide range of products available
to consumers, such as innerspring mattresses, waterbeds, futons and other air-supported mattresses. We believe market participants compete
primarily on the basis of price, product quality and durability, brand name recognition, innovative features, warranties and return policies.
We believe our most significant competition is the conventional mattress industry, which is dominated by four large, well-recognized
manufacturers: Sealy (which also owns the Stearns & Foster brand name), Serta, Simmons and Spring Air. Although we believe our Nautilus
Sleep Systems offer consumers an appealing alternative to conventional mattresses, many of these conventional manufacturers, including Sealy,
Serta, Simmons and Spring Air, possess significantly greater financial, marketing and manufacturing resources and have better brand name
recognition.
In addition to the conventional mattress manufacturers, several manufacturers currently offer beds with firmness technology similar to our
Nautilus Sleep Systems. We believe the largest manufacturer in this niche market is Select Comfort. Select Comfort offers its sleep systems
through retail stores and engages in a significant amount of direct marketing, including infomercials, targeted mailings, print, radio and
television advertising. Select Comfort has an established brand name supported by marketing and manufacturing resources. Select Comfort also
has significantly greater experience in marketing and distributing sleep systems. We believe the market for sleep systems is large enough for
both companies to be successful and that our Nautilus Sleep Systems possess features that will enable us to compete effectively. However, the
intense competition in the mattress industry, both from conventional mattress manufacturers and Select Comfort, may adversely affect our
efforts to market and sell our sleep systems and, consequently, may adversely affect our financial performance.
COMMERCIAL/RETAIL SEGMENT PRODUCTS
COMMERCIAL FITNESS EQUIPMENT. The market for commercial fitness equipment is highly competitive. Our Nautilus, Schwinn Fitness,
and StairMaster products compete against the products of numerous other commercial fitness equipment companies, including Life Fitness,
Cybex, Star Trac and Precor. We believe the key competitive factors in this industry include price, product quality and durability, diversity of
features, financing options and warranties. Some of our competitors have greater financial resources, significantly more experience in the
fitness industry, and more extensive experience manufacturing their products.
RETAIL FITNESS EQUIPMENT. The market for retail fitness equipment is extremely competitive. Our Nautilus, Schwinn Fitness, and
StairMaster retail products compete against the products of numerous domestic retail fitness equipment companies including ICON Health &
Fitness (marketing products under the brand names Weslo, Health Rider, Weider, NordicTrak and ProForm), Star Trac, Life Fitness, Cybex,
Fitness Quest, Bollinger Industries, and Precor. The Company's products also indirectly compete with outdoor fitness, sporting goods and other
recreational products. We believe the key competitive factors in the retail fitness equipment industry include price, product quality, brand name
recognition, customer service and the ability to create and develop new, innovative
17
2002. EDGAR Online, Inc.