Garmin Prepares To Defend No. 1 Rank

New York — Garmin could be on track to achieve one of those rare positions enjoyed by brands such as Apple in portable audio and Bose in home audio.

During the first 10 months of 2006, Garmin captured more than half of retail-level unit and dollar sales in GPS portable navigation devices (PNDs), but it faces a formidable challenge as a deluge of competitors enter the market looking for a share of triple-digit market growth.

Garmin credits its success thus far to rocket science, or more precisely, aviation science. It has learned how to siphon technology from its $50,000 GPS devices used by pilots and apply it to sub-$800 consumer devices. It also manufactures its own products to complete what Charles Morse, Garmin mobile and PND marketing director, calls its number one advantage — vertical integration.

As for Garmin's future, TWICE asked Morse how he expects to stay No. 1 in the increasingly competitive market:

TWICE: How is Garmin managing to increase its market share while new competitors emerge almost weekly?

Morse: It's our ability to bring out products that are the easiest to use and … at a variety of price points. We are a vertically integrated company. We have almost 1,000 engineers on staff. The hardware, the electrical, mechanical, software, everything is done in house, beginning with the look and feel of the product and then after the sale, the product support.

TWICE: Is the high end of GPS doing well, even as retailers and consumers clamor for products under $399?

Morse: We thought the nuvi 660 [$999] was going to do well, but I think it is exceeding what we thought it would do in sales. It's our premium navigation device. Customers are willing to pay for better products.

TWICE: How many PNDs did you introduce this year?

Morse: The c500 series, two nuvis, the Garmin mobile 2820, the Zumo. We're introducing a PND about every few months.

TWICE: Will you keep up that pace next year?

Morse: We had 70 products total for the whole company. I don't know that we'll have 70 next year, but I don't see the innovation ending any time soon. We are one of the few GPS manufacturers that are in as many different markets as we are: aviation, marine, outdoor fitness, and PNDs. It allows us to bring a lot of the learning from a pilot's perspective, and they rely on it for life and death.

TWICE: Will Garmin be able to maintain its share in 2007?

Morse: It's our objective to play to win in every market. We're not satisfied with anything less than being No. 1. We bring product to market quicker and with more features … that's what people are looking for.

If we were relying on an outside software development team and an industrial design house and industrial engineers and trying to get contract manufacturing in China from a factory that is also making MP3 players and laptops, I don't know that we would be as well positioned. We're the only manufacturer, as far as we know, that is vertically integrated.

TWICE: How is real-time traffic performing?

Morse: There's been a moderate take rate on real-time traffic. The market for real-time traffic is still in the education phase for the consumer. It's still pretty early in the market; it's only been the latter half of the year that we've been bundling receivers with any free service, so it's still fairly early.

TWICE: What are some directions for technological change in the future?

Morse: One area of growth will be content. We have the Garmin language guide and a discount finder guide and a travel guide sourced from Fodors. In the future, you'll see more types of content.