Flir Systems and Raymarine Marine Electronics Poised

One of the big questions that market analysts have about Raymarine Marine Electronics is whether it can recapture its United States market share. In 2009 Raymarine saw its United States sales drop to $54 million from over $98 million in 2008. Although much of that 44 percent drop can be attributed to a tough marine electronics market, the drop was far steeper than what was experienced by many of its competitors.

Now that Flir owns Raymarine, the chances that Raymarine will recapture the United States market have considerably improved. Not only does the acquisition of Raymarine provide Raymarine with the capital to preserve its research and development investment, but points Raymarine straight into the United States market.

Flir, an American company, and a company with over $1 billion in annual revenues, obtains about 59 percent of its sales in the United States. But not only that, the company has an ever-expanding distribution network in the United States and strong ties with United States government purchasing agents.

Another very important fact about Flir that may help Raymarine recapture the United States market is that Flir is one of those billion dollar companies that continually increase revenues and earnings. But that’s just the tip of the iceberg. Flir has proved itself frugal, having socked away over $280 million in cash and cash equivalents.

And it’s that cash that may make other marine electronics companies nervous in a market that’s already littered with less than pretty balance sheets. But for them it’s worse than that. Because Raymarine avoided bankruptcy, Raymarine’s competitors no longer have the chance they did at winning over Raymarine’s 450 OEM accounts that Flir acquired. Nor can they now get the competitive edge from having Raymarine’s vast distribution network knocked out.

Although other marine electronics manufacturers might still think that corporate bloat could slow down Flir’s entry into the consumer marine electronics market, the fact of the matter is that these competitors could wake up very soon to the realization that quite the opposite is true.

Besides just the threat of cold cash, Flir’s background in the technology market should cause its competitors concern. If one examines Flir’s history, what becomes glaringly obvious is that Flir knows when technology will reach a price point for a specific market. And that means that Flir is probably right with its conclusion that the 2009 through 2014 timeframe will be when thermal and computer vision technology will be ripe for the consumer marine electronics market.

In addition to losing out on what could be the next market wave in marine technology, thermal imaging and computer vision, Raymarine’s competitors may have more problems as a result the acquisition. For one, Flir knows electronic technology from the ground up. Its experience dates back 30 years and encompasses almost every aspect of engineering technology. As Flir puts it “We have significant electronic design capabilities across several specialized areas, including readout integrated circuit design, signal processing, image processing and electronics integration. Our design expertise lies in the areas of reliability, low power consumption and extreme environmental survivability.” In other words, everything you need to tackle today’s marine electronics design problems.

Whether it’s today or tomorrow when Flir opens the floodgates of cash and new marine product technology is anybody’s guess. The real question is whether Flir and Raymarine can pull off a successful marketing and sales strategy to increase Raymarine’s market share. On the other hand, the rquestion for other marine electronics giants like Navico and Garmin is whether or not they can compete with the technology, cash and distribution rich Flir/Raymarine combo.

However, there’s more than just the marine electronics giants for Flir to worry about. Flir has numerous competitors in the computer vision and thermal imaging market that also would like a piece of the marine electronics pie. Still, though, these competitors don’t have the reach into marine electronics distribution that Raymarine does, nor do they have a solid revenue stream from the government and homeland security markets that Flir does.