- Morgan Stanley continues to be cautious on Garmin (NASDAQ:GRMN) noting that while it is not necessarily an accurate reflection of the PND competitive environment for all of 4Q06, they believe the strong sales performance during the key Black Friday selling period by low-priced competitors, Mitac and Magellan, underscores firm's view that: 1) market pricing may fall further than the market expects during the holiday season, 2) GRMN's products are priced well above competitor products, and 3) price will likely be the key driver of share in 4Q06.
GRMN has historically avoided being a price leader and does not appear to have deviated from this strategy for Black Friday. MS notes, however, that GRMN has never previously participated in such a high-growth, price-competitive consumer product segment. The 670% YoY growth in US market PND unit sales for the week ending 11/25/06, coupled with deep discounting on the Mitac Mio and Magellan Roadmate products, likely demonstrates the high elasticity of demand for the PND product category.
With a ~37% market share, Mitac dominated Black Friday PND sales due to its Mio c310x model, which had an average street price of ~$180 for the week ending November 25th. Magellan's 16% market share also benefited from robust sales of its Roadmate 2000, which had an average price of ~$290 for the same period. Both prices were apparently the result of heavy discounting for the Black Friday selling period, with average street prices for the products at ~$380 and ~$385 respectively for the previous week ending November 18th.
Garmin's share of PND market unit sales for the week ending November 25th was approximately 34%, a meaningful reduction from the approximately 60% level seen in 3Q06. Key PND competitor TomTom saw its market share drop from approximately 22% for 3Q06 to 3.3% for the week ending November 25th.
Notablecalls: These comments may hurt GMRN today. Considering the profile of NC readers I don't even have to explain why. Also note that Dr Min H. Kao, the company's co-founder, Chairman and CEO last night established pre-arranged trading plans to sell a portion of his shares in the company over a designated period.
GRMN has historically avoided being a price leader and does not appear to have deviated from this strategy for Black Friday. MS notes, however, that GRMN has never previously participated in such a high-growth, price-competitive consumer product segment. The 670% YoY growth in US market PND unit sales for the week ending 11/25/06, coupled with deep discounting on the Mitac Mio and Magellan Roadmate products, likely demonstrates the high elasticity of demand for the PND product category.
With a ~37% market share, Mitac dominated Black Friday PND sales due to its Mio c310x model, which had an average street price of ~$180 for the week ending November 25th. Magellan's 16% market share also benefited from robust sales of its Roadmate 2000, which had an average price of ~$290 for the same period. Both prices were apparently the result of heavy discounting for the Black Friday selling period, with average street prices for the products at ~$380 and ~$385 respectively for the previous week ending November 18th.
Garmin's share of PND market unit sales for the week ending November 25th was approximately 34%, a meaningful reduction from the approximately 60% level seen in 3Q06. Key PND competitor TomTom saw its market share drop from approximately 22% for 3Q06 to 3.3% for the week ending November 25th.
Notablecalls: These comments may hurt GMRN today. Considering the profile of NC readers I don't even have to explain why. Also note that Dr Min H. Kao, the company's co-founder, Chairman and CEO last night established pre-arranged trading plans to sell a portion of his shares in the company over a designated period.
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