Outdoor & Fitness Segment Only Bright Spot in Garmins Q3 Results

Nov. 5, 2009, 3:25 a.m.
Dominique Bonte, VP/Managing Director, Verticals/End Markets

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Garmins third quarter financial results confirm the rising popularity of GPS outdoor and fitness devices as it remains Garmins only segment to post quarterly and year-to-date YoY revenue growth:

Q3 YoY growth per segment

- Automotive/Mobile segment revenue decreased 13% to $546 million

- Outdoor/Fitness segment revenue increased 11% to $132 million

- Aviation segment revenue decreased 29% to $58 million

- Marine segment revenue increased 3% to $45 million

Year-to-Date YoY growth per segment

- Automotive/Mobile segment revenue decreased 27% to $1.24 billion

- Outdoor/Fitness segment revenue increased 4% to $320 million

- Aviation segment revenue decreased 29% to $181 million

- Marine segment revenue decreased 16% to $144 million

This segment - which was long considered niche - is now becoming a respectable product line for Garmin representing 18% of total revenues. While the competitively priced new Dakota line of outdoor handhelds is an important revenue contributor, fitness solutions are outperforming outdoor within this segment with Garmins latest models in its Forerunner GPS fitness watch range being very popular. At the same time the new Edge 500 cycling computer is expected to drive holiday sales. Unsurprisingly, Garmin did not hesitate to extend its sponsorship of the Team Garmin-Slipstream cycling team till 2013.

It is hard to believe the outdoor and fitness segment has been neglected by almost all major GPS vendors up to now leaving this market largely to Garmin and a few players from Asia-Pacific. Even Nokia recently spun-off its hugely popular free Nokia Sports Tracker software.This lack of competition allows Garmin to maintain premium price levels and continue to post strong gross and operating margins something which is becoming increasingly problematic in the PND and mobile segment.

However, even this GPS segment will not be spared from the convergence onslaught with companies such as Fullpower taking the market by surprise boasting millions of downloads of their MotionX GPS Sports iPhone application, accelerating the transition of Fitness & Outdoors into an established GPS segment.

ABI Researchs recent Sport and Fitness GPS Devices and Applications -

GPS Watches, Cycling Computers, Golf Rangefinders, and Smartphone Applications describes this fast growing GPS segment including drivers and barriers, business models, major players and solutions, convergence trends and detailed forecasts. It is published as part of the Location Based Services Research Service.