Success Attracts Competition
By William Trent, CFA of Stock Market Beat
Garmin (GRMN) has been one of the most successful consumer electronics companies of the last couple of years, as evidenced by its share performance. The company is a leading provider of the GPS navigation systems that have become increasingly more popular in recent times.
According to Standard and Poor’s:
We think the personal navigation device market is poised for mass consumer adoption, and believe Garmin, as a market leader, is in a prime position to capitalize on the upswing. According to the NPD Group, Garmin maintains about a 50% market share for personal navigation devices sold at retail in the U.S. We see broader consumer adoption of PNDs driven by three factors: lower prices, technology that makes PNDs “must-have” items, and greater consumer awareness.
However, Garmin’s success is breeding new competition, as evidenced by the following story.
Philips Electronics said it would begin making mobile personal navigation systems to tap into their growing popularity, hurting shares of route-finding market leader TomTom.
Europe’s biggest consumer electronics producer will compete directly with Dutch navigation device maker TomTom by introducing a new line of three products from September and October in Germany, France and the Benelux countries starting at 400 euros ($500).
Shares in TomTom, which has a market share of around 50 percent in Europe, were down 3 percent to 30.55 euros.
“This will contribute to the commoditisation of these products. You can already get entry-level devices from reputable brands for as little as 199 euros. Profit margins are due to come down,” said analyst Marc Kennis at Bank Van Lanschot, who rates TomTom a “sell” with a share price target of 25 euros and Philips a “buy” with a target of 30.50 euros.
Philips is not the first mainstream consumer electronics company to have discovered the market for standalone navigation devices. Japan’s Sony entered the European market earlier this year after specialised niche players such as TomTom and Garmin created a booming industry.
Both Garmin and Sony have said they want to grab 20 percent of the European navigation devices market. The overall market in Europe and the United States is expected to roughly double to well over 9 million units this year.
http://www.stockmarketbeat.com/
Garmin (GRMN) has been one of the most successful consumer electronics companies of the last couple of years, as evidenced by its share performance. The company is a leading provider of the GPS navigation systems that have become increasingly more popular in recent times.
According to Standard and Poor’s:
We think the personal navigation device market is poised for mass consumer adoption, and believe Garmin, as a market leader, is in a prime position to capitalize on the upswing. According to the NPD Group, Garmin maintains about a 50% market share for personal navigation devices sold at retail in the U.S. We see broader consumer adoption of PNDs driven by three factors: lower prices, technology that makes PNDs “must-have” items, and greater consumer awareness.
However, Garmin’s success is breeding new competition, as evidenced by the following story.
Philips Electronics said it would begin making mobile personal navigation systems to tap into their growing popularity, hurting shares of route-finding market leader TomTom.
Europe’s biggest consumer electronics producer will compete directly with Dutch navigation device maker TomTom by introducing a new line of three products from September and October in Germany, France and the Benelux countries starting at 400 euros ($500).
Shares in TomTom, which has a market share of around 50 percent in Europe, were down 3 percent to 30.55 euros.
“This will contribute to the commoditisation of these products. You can already get entry-level devices from reputable brands for as little as 199 euros. Profit margins are due to come down,” said analyst Marc Kennis at Bank Van Lanschot, who rates TomTom a “sell” with a share price target of 25 euros and Philips a “buy” with a target of 30.50 euros.
Philips is not the first mainstream consumer electronics company to have discovered the market for standalone navigation devices. Japan’s Sony entered the European market earlier this year after specialised niche players such as TomTom and Garmin created a booming industry.
Both Garmin and Sony have said they want to grab 20 percent of the European navigation devices market. The overall market in Europe and the United States is expected to roughly double to well over 9 million units this year.
http://www.stockmarketbeat.com/
posted by douglas mcintyre at 10:07 AM
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