Issue link: http://read.uberflip.com/i/807903
www.BoatingIndustry.com INDUSTRY NEWS 8 | Boating Industry | April 2017 Boating Industry sits down with Navico CEO Leif Ottosson to learn why the future of marine electronics lies in present-day automobiles. BY CRAIG RITCHIE 2016 was a busy year for Navico, the parent company to the Lowrance, Simrad, B&G and GoFree marine electronics brands. Its saltwater fishing-oriented Simrad brand posted a 37 percent revenue growth in Amer- ica last year, on top of 29 percent gains world- wide. Lowrance continued to strengthen its position in the freshwater fishing market, while the sailing-oriented B&G brand also posted some of its strongest revenues yet over the past year. Then came the news in August that Navico had been acquired by Goldman Sachs Merchant Banking Division and Altor Fund IV. This fresh ownership brought sub- stantial investment, allowing Navico to fund acquisitions and R&D on a massive scale, as it moves toward its goal of completely dominat- ing the marine electronics category. Boating Industry sat down with Navico CEO Leif Ottosson to talk about the com- pany's future plans, and what kind of future it sees for marine electronics. BOATING INDUSTRY: The world of marine electronics continues to change at a rapid pace. It must be very difficult to plan for the long term when product life cycles are now measured in months. LEIF OTTOSSON: Product life cycles have grown shorter, there is no question about it. We launched the Lowrance HDS in 2008, for example, and now in 2017 we're into the fourth generation of it. But people want to have the latest capabilities. Would you want to use a cell phone from 10 years ago? No, of course not, we all want the capabilities that exist today. As a result, the product life cycle today is around three years, at least for multi- function displays. Radar, autopilots and even sonar can go a bit longer but for MFDs it's about 36 months. Worldwide, we're introducing a new product every 15 to 20 days. It's an enormous amount of work to do that, since for every product, you need to have an R&D plan, you need a manufacturing plan, you need a mar- keting plan, you need a supply chain plan – it's a huge commitment. But it is new product that drives the market forward. If you want to be the leader, you have to lead. BI: How much money does Navico devote to R&D in order to sustain that kind of pace? OTTOSSON: Currently we invest between 8 and 9 percent of our revenues in R&D. It's a comparatively high percentage, it's a big pro- portion of our revenues. If you look at the recreational marine indus- try today, there are five major players in our space – Navico, Garmin, Raymarine, Furuno and Humminbird. And between the five of us, we probably represent 85 to 90 percent of the total market. But it's a very difficult market to compete in because it requires a constant, sub- stantial R&D investment in order to stay on top. If you go back to 2010, Navico and Gar- min together represented about 40 percent of the total market. Today, Navico and Garmin have about 50 percent of the market. That leaves a smaller share for the rest. BI: Lowrance and B&G are both celebrating their 60th anniversary in 2017. What would you say has been the biggest change since they were launched in 1957? OTTOSSON: The technology has changed, obviously, but boaters have also changed, and in fundamental ways. Boaters used to all be enthusiasts, in the sense that they would spend hours tinkering with the boat, and they felt that was just as much fun as actually going boating. It was part of the whole expe- rience. Those people still exist, of course, but they no longer represent the majority of the boaters on the water. People face huge demands on their time today, and the result of that is they don't have the luxury of spending as much time enjoying their boat as they used to. Today, they want to take the family to the boat, enjoy that time on the water, then put it away and move on to something else. This is why we are seeing more and more concierge-type services at marinas, where the client calls up, the marina puts the boat in the water, fuels it up and has it ready and waiting for the owner to arrive. Then, at the end of the day, they pull it out of the water, clean it up and put it away till next time. There is a growing demand for this type of service all over the world. Because so many boaters now spend less Q & A with Navico CEO Leif Ottosson