Insurance
Luxottica’s eyewear dominance is demonstrated in one final way: insurance. Luxottica’s owns EyeMed Vision Care, one of the largest providers of vision care insurance in the United States. EyeMed Vision Care provides vision care insurance to over 33 million fully-funded members and 100 million discount members for other membership and managed care organizations. EyeMed’s insurance network includes Luxottica’s own retail locations, other large non-Luxottica retailers such as J.C. Penney Optical, and hundreds of independent optometrists, ophthalmologists and opticians. By providing insurance, Luxottica is able to fund its own wholesale and retail operations.
Innovation
One of the problems with monopolies (or near-monopolies) is that tends to breed complacency. Why try something new and innovative when you can just rest on your laurels as the undisputed king of your industry? That, however, is not a mistake Luxottica Group SpA (ADR) (NYSE:LUX) seems willing to make.
Google Inc (NASDAQ:GOOG) has been making tech headlines for over a year with their latest and ambitious endeavor to develop smartglasses technology. Named Google Glass, the smartglasses technology aims to combine the functionality of a smartphone with the technology to display that information directly onto a user’s glasses. Set to be released later this year, Google Glass has the potential to change how we interact with our technology in an increasingly internet-connected world.
Although Google Inc (NASDAQ:GOOG) has been the company making the headlines, Luxottica is never a company to be left out in the cold when eyewear is involved. Luxottica has been developing the technology behind smartglasses display optics for nearly 15 years (about as long as Google has been a company). Luxottica has many patents in this area. Unlike Google though, Luxottica Group SpA (ADR) (NYSE:LUX) already has a product on the market. Late last year, Luxottica’s Oakley brand introduced the Oakley Airwave goggles. These high tech ski goggles include integrated GPS, preloaded ski slope maps, Bluetooth, iPhone and Android smartphone connectivity and a heads-up display built into the goggles.
While ski goggles have a limited, but profitable, niche market, Luxottica also has a number of options for smartglasses in the traditional glasses segment. The company has expressed a desire to either license their parents to other companies or release their own smartglasses to go head-to-head with the Google Glass. And with Luxottica’s size, scale and experience in the eyewear industry, they are not a company to be underestimated, even up against a tech giant like Google.
Foolish Bottom Line
Monopolies are great (for investors)! The problem with monopolies is that competition can often put an end to a good thing. The next best thing to investing in a monopoly is to invest in a near-monopoly. And with a firm grip on the eyewear industry’s design, manufacture, distribution, retail, and insurance businesses, Luxottica Group SpA (ADR) (NYSE:LUX) is just that, a near- monopoly.
The article Investing in a Near-Monopoly originally appeared on Fool.com and is written by Matthew Luke.
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