GRMN
#<UNK>, many of our products that we offer in outdoor and fitness are beyond some of the notable news that has been circulating, in terms of the overall activity tracker market.
So our product lines were strong, particularly those with GPS.
Fenix was a good performer.
And we see people wanting to step up to a more advanced smart watch product, which Fenix definitely falls in that category.
Yes, I think we've talked about the secular trends particularly in fitness, and we do anticipate that basic activity trackers are going to see a maturing cycle starting now, and going forward into the future.
But with that said, on the outdoor side, we do see positive response to our Fenix 5 announcement, and we anticipate starting deliveries of those soon.
And we also do see increasing interest from retailers in the outdoor wearables.
So for example, we are gaining additional shelf space in some of the key retailers, particularly in the US, and expanding our shelf space in the US market.
It is attracting a different kind of customer.
There is certainly strong running bias in people that buy Fenix products, but we're also seeing people that are just generally aspirational and love any kind of outdoor activity move up to the watch.
We believe our channel inventories are reasonable exiting the year, and into Q1.
Many retailers, particularly in the US try to manage their inventories very carefully as they close out there year.
But we believe our inventory situation is okay.
Yes, so starting first on BMW.
For this program, there is not any significant upfront investments for this particular program.
We had already made investments in our factories, in order to be able to accommodate this win, and those are already costs we've incurred.
For the solution, it's the media graphics unit, which actually is a common architecture piece across the entire BMW line, not only in China, but around the world.
And so, consequently this is production of that architecture for the China market, but it is scalable elsewhere.
In terms of fitness, in terms of the mix there, as I mentioned we are seeing stronger interest in more advanced products on the wearable side, and that includes what we would call our wellness line, like vivo as well as obviously Forerunners, which are all GPS products.
We don't split those out by category, but I would say that GPS was the stronger performer, and basic activity trackers were weaker.
We don't have numbers to share right now, but we can certainly prepare those and share them in the future.
Yes, so definitely product mix is still a factor, even though basic activity trackers were weaker.
Basic activity trackers have a very low cost basis, so their margin profile doesn't necessarily improve the overall fitness market, if they are weaker.
That said also, the vivo line in general, including those with GPS, they are feature-rich products and they have to sell at a competitive price, so consequently there margin profile is generally lower.
In terms of Apple and the specific impact on our market by the Series 2, I would say that certainly their initial results would appear like they're doing very well with Series 2.
But we don't see the impact on our customers in our segment from that device.
I think that it's a very competent device and it does a lot of things, but as we said before in the past, we believe that it's attracting a slightly different customer base than what we speak to.
Okay.
<UNK>, starting with marine, definitely there is a component of our outlook that reflects the improving macroeconomic conditions surrounding marine.
Marine has been on a slow growth trajectory since the downturn, and we continue to see that, so certainly some of that is due to organic market growth.
But certainly the other part is the momentum we see in our business, and particularly we believe we are taking share from the major competitors, and we believe the reason for that is our strong product line up and superior features and technologies that we have in our products.
Regarding free cash flow currently for 2017, based on the current guidance out there, we anticipate free cash flow of about $500 million, and as you mentioned, that includes the increased CapEx, as well as you saw in 2016, we had quite a bit of improvements on working capital.
Probably won't see as much of those working capital improvements in inventory, as well as the assumed year-over-year change in the operating income, also.
And so as I mentioned on BMW, what we will be supplying is a hardware component that drives the overall media system in the vehicle.
So it is a higher dollar value product, which we'll definitely benefit on the revenue side.
I think in terms of margin profile at OEM, we don't break it down by category, but we generally said that the margin profile from the OEM business is generally lower than that of the overall auto business, so there would be some downward pressure as those revenues ramp up.
