DUCK KEY, Fla.— FTR caught up with Navico President & CEO Leif Ottosson for an interview on the state of Navico and matters affecting the marine electronics industry as a whole.
Ottosson, who holds a MBA from Harvard and a BSC in finance and mathematics from Northern Arizona University, has lead Navico since 2009.
FTR: Some dealers might want perspective on your acquisition of C-Map, which also provides cartography to your competitors. You say Navico and C-Map will be run as separate companies. How do they know the companies will be run separately and what was your position on acquiring C-Map in the first place?
Ottosson: For us, it was a very interesting company to take a look at. From the beginning, we were not certain whether it was going to be a subsidiary of Navico or we were going to keep is separate. After multiple discussions we said, ‘Okay look, C-Map is doing quite a bit of business with other OEM’s in the market including Raymarine, Furuno, Garmin and others, and it would be a shame to lose that business. And so that’s why we have put a ‘Great Wall of China’ between us in making sure they operate on a stand alone basis.
It made sense to take some of the assets that were in Navico and put them over there—like Insight Genesis and Lake Insight—because that could be cartography that is also interesting for some of our competitors, thereby generating more sales on the same assets.
FTR: A lot of your products are made in Ensenada, just across the border, which is a contentious subject right now. Does Navico have a stance at all on the potential levying of taxes from Mexican imports?
Ottosson: In the final end, it will lead to increased prices and the consumer would have to pick up the tab for that.
FTR: The big news this year is that Goldman Sachs purchased 50 percent of Navico. What is the short term impact of that transaction and the long term impact you think it will have?
Ottosson: The short term impact is not different for us. We have basically been managing on our own in the past, not requiring any capital like that. What the investment enables is for us to be a bit more aggressive in finding other opportunities in the market to grow Navico beyond its organic growth. It allows us to take a look at acquisitions and see what we can do in taking a larger part of the marine electronics market.
We are, today, a $350 million company. We see that products becoming more and more complex requires more and more R&D and that requires that you have more and more revenues in order to handle that type of R&D. So, we believe in finding companies that are in the market today and exploring opportunities to acquire them in order to gain a larger base for R&D. We are primarily looking at the commercial marine market. It’s difficult for us to buy something in recreational marine because we are already so large, but there are multiple opportunities in the commercial market because it is very fragmented. Many of those technologies have the same basis. Many of the products we build have the same fundamentals so that means we can leverage the R&D investment over a bigger revenue base.
FTR: When you look at the design of the MFDs that come to the market now, you mention earlier this morning, looking at high-end cars as an example. Do you coordinate with auto manufacturers or do you go to a showroom and say, ‘Oh, I like this from the BMW and this from the Lexus?’
Ottosson: We do quite a bit of what you just described there. We go to all of the shows, take a look and see what’s happening. We go to electronics shows and display shows to see what’s happening in the market and see what other people are using. In the marine market, you are outdoors and it’s a very tough environment, so it is not like having a screen in a car or having a screen on your phone. There are much higher requirements in our type of industry, so we are trying to study what’s happening and what people are getting used to. Some of the screens we have in new products from Lowrance and Simrad, the IPS screens, that is what you are used to from your phone—the kind of screen that you can see from a lot of angles with very high clarity.
There is new display technology coming like OLED. There are pop-up displays where you don’t have a screen you are projecting against a surface like a windshield. There’s a lot of new display technology that we are watching. We are also in contact with the manufacturers in Taiwan and China because that’s where a lot of this technology is coning from. We are looking at what’s next and what is going to be affordable that we can use in our type of products.
FTR: U.S. sales for Simrad were up 37% last year and you hope they might go over 50% this year. Why is Simrad suddenly taking off in the U.S.?
Ottosson: Well one of the things is that we introduced, for the first time both in Simrad and B&G we have low end products. We have a range called the GO range in Simrad that is very suitable for the retail market and that has helped Simrad gain brand recognition and we are able to sell more value-range type products through retail channels. Simrad has been a brand for ‘people in the know’ so it hasn’t been as well-recognized as Raymarine and Garmin for instance, but people are really starting to gain an awareness of the brand.
FTR: The last time you were here in Duck Key was 2015. What is your favorite feature that’s been introduced—in all of your lines—in those two years?
Ottosson: I’m really fond of the 3D sonar. I think that’s fantastic development. We are also of course looking at 3D sonar from different angles. You see incredible pictures from that and we are going to get more and more of that. We are working on much more complicated transducers that can basically show both underneath and to the side when the boat is standing still. StructureScan 3D shows where we are going with this.
I’m waiting for 3D radar where it’s not just the plotting that you see, but you can actually see it as live targets that you can actually see an island or a boat that you can see. All o that type of technology is coming. It may not happen in the next two or three years but with stronger and better processors you’re going to see the power to handle 3D models and you’re going to get that much greater experience.