As shares of GoPro Inc (NASDAQ:GPRO) have sunk since its IPO, investors have been concerned about the company's product strategy and ultimately what the company's competitive advantage is. And given competitors like Garmin (NASDAQ:GRMN) and Eastman Kodak entering the digital action-camera market, the concern is justified. 

Despite the competition, GoPro has maintained strong market share. So, what is the company's competitive advantage, and how will it leverage that in the future? 

Karma drone.

Karma drone. Image source: GoPro.

A brand means something...

It sounds opaque, but GoPro's biggest asset is really its brand. When you think of action sports, whether on TV or in your own life, brands like GoPro and Red Bull seem to always be around the action. That's resulted in a loyal following, despite the competition. As fellow Fool Steve Symington highlighted a few months ago, GoPro's U.S. market share of 21.5% in digital cameras/camcorders was up 80 basis points from a year ago and included three of the five best-selling products in the category. 

This increase in market share came despite improving offerings from competitors. The VIRB line from Garmin arguably has equal features to the Hero 5 line from GoPro, and Kodak is doing some interesting work with 360 video that could compete with GoPro's advanced products. But they've been held back from a larger market share by brand awareness and loyalty, something investors can't overlook. 

Is technology a GoPro advantage?

The biggest challenge for GoPro is that it doesn't seem to have much of an advantage in technology. Ambarella is really the brains behind GoPro cameras and the app technology GoPro builds trails competitors'. From a technology standpoint, GoPro doesn't really do anything that another company can't copy, which is why its brand advantage is so important. 

The launch of the Karma drone really highlights this technology challenge. There's no question Karma is well behind industry leader DJI's products from a technology standpoint, and the Karma's recall didn't help. But GoPro is still selling (at least some) Karmas because customers want a product that will work with their GoPro camera and are willing to give the company a chance. Technology isn't a competitive advantage, but if GoPro's technology is at least on par with competitors', it makes the brand advantage more tangible. 

Where GoPro can leverage its advantages

What's challenging for GoPro is that its only real competitive advantage is a stronger and more identifiable brand in the action camera market than competitors. If its technology doesn't fall behind others entering the market, it could maintain a strong position in action cameras with a good brand alone, but that may not be enough for investors. 

It's not clear that GoPro can leverage its brand to gain a significant share in drones without making a better product than the Karma of today. And in 360 and virtual reality cameras, the company is up against well-funded competitors like Samsung that don't want to miss out on the market. I like the GoPro brand a lot, but a brand alone doesn't guarantee success, and GoPro has found that out the hard way in the past couple of years.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.