Forbes, Oct 4, 2016 (I)

choi

(1) Alex Knapp, Map Quest. Smartphone navigation apps threatened to push Garmin off the road. To survive, it has shifted to wearables and relied on decades of manufacturing experience to catch up.
http://www.forbes.com/forbes/wel ... -fitness-wearables/

Quote:

(a) "At the company's height it was generating $2.5 billion in sales–nearly three-quarters of Garmin's total revenue–and pushed the stock to a peak of around $120 a share in October 2007. But just a few months earlier, in June, Apple had introduced a little device called the iPhone. Paired with the free Google Maps navigation app, the smartphone eliminated the need for a separate device. Sales of Garmin’s GPS units plummeted by almost $1 billion in three years, and the company lost almost 90% of its market value.

Cliff "Pemble replaced Garmin's billionaire cofounder Min Kao as CEO in 2013 as the company desperately searched for a different route. Low-priced integrated chips, which combine a processor, memory and connectivity, had suddenly made small, sensor-laden gadgets–wearables–much less expensive to make, and smaller companies like Fitbit and Jawbone had jumped to early leads in the market. Garmin joined the race, too, and decided to focus on selling slick, relatively expensive wearables to hard-core enthusiasts–abandoning the low end of the market to the startups [such as Fitbit and Jawbone]. Garmin's sales are growing again, and most of the increases are coming from wearables. The Garmin division that includes wearables and other handheld sports devices brought in an estimated $565 million last year from wearables, up eightfold in two years. The stock, which traded as low as $15.17, recently traded at $49.08, up 33% year-to-date.

"Garmin originated in 1989 over dinner at a Red Lobster in Olathe, Kans. Its cofounders, Min Kao and Gary Burrell, were frustrated that their employer, a unit of AlliedSignal, didn't care much about GPS technology. So they struck out on their own, scraping together $4 million from savings accounts, family, friends and a few bankers. One of their first hires was a fellow math nerd named Clifton A Pemble, who designed some of Garmin's earliest software. 'I was there on day two,' he says.

"Unlike competitors, Garmin outsourced nothing, making unfashionable vertical integration an early and key hallmark of its business. And despite an ill-timed IPO in 2000, Garmin survived when the dot-com bubble burst. Its sales reached $573 million in 2003, and Kao and Burrell made their debuts on The Forbes 400 with fortunes of $970 million and $810 million, respectively.

(b) "Garmin sets high prices on these products [ie, wearables] and designs them thoughtfully. The $350 Approach S6, for instance, measures a golfer's swing speed and maps more than 40,000 golf courses. * * * Many of its devices are waterproof (vital for swimmers and triathletes) and feature longer battery lives than comparable products. And all are made in one of Garmin's three factories in Taiwan, part of its signature vertical integration. Garmin also maintains its own warehouses and call centers, and does all its marketing, design and engineering in-house. Pemble claims all this expensive overhead is an advantage, because it means that Garmin can shift production more quickly than companies like Apple and Fitbit that have to work within the calendars and capabilities of their partners.

Note:
(a) The title (Map Quest) is a wordplay on the company MapQuest.
https://en.wikipedia.org/wiki/MapQuest
(founded in 1967 in Chicago by RR Donnelley & Sons [which prints and sells maps]; acquired in 2000 by AOL and mvoed headquarters to Denver)
(b) Cliff Pemble's birth name is Clifton A Pemble.
(c) There is no need to read the rest.