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Forerunner uses signals from GPS satellites to monitor your position and calculate pace and distance. From a technical standpoint, there are a few other types of devices that are commonly used by runners and bicyclists.
A simple pedometer uses a spring-loaded weight inside a small device worn on your belt to detect the shaking motion of your body as you take a step. They're inexpensive but less accurate than other types of devices. Their features tend to be very basic.
"Foot pod" systems use an accelerometer inside a module that's attached to your shoe to detect and measure the motion of your foot. Users report that they work quite well once they're calibrated to your stride. They offer more features than a simple pedometer but they tend to lack more sophisticated features available with Forerunner. Where they do stand out, however, is for people who usually run in areas where the sky is completely blocked by heavy tree cover or tall buildings. In these situations, foot pods often will provide more accurate data than GPS based systems like Forerunner.
Makers of devices that use foot pods include Nike, Polar, FitSense and Suunto.
There are many devices that monitor the rotation your bicycle's wheel and/or crank shaft. Many offer specialized features just for bicycling. If your focus is completely around bicycling, Forerunner has some nice features to offer and it's a lot of fun to use; but wheel / crank shaft driven devices may offer more specialized features for bicyclists.
Garmin also makes the Edge 205 and 305, which are designed specifically for bicycling. They have similar features to Forerunner. Edge 305 includes a barometric altimeter and can also monitor speed and cadence using bike-mounted sensors.