Logitech 2004 Annual Report Download - page 56

world’s largest PC manufacturers, as well as to most of the next layer of systems manufacturers and
integrators. Because Logitech’s engineering and design staffs work collaboratively with OEM
customers on the specifications for future products, the Company believes its OEM relationships
provide it with valuable insight into the future of the computer marketplace and technology trends. Over
the past twelve months, Logitech has extended its OEM presence beyond its traditional customer base,
and it now supplies several of its products to console platform manufacturers and game publishers.
The combination of a strong retail brand and a high-volume manufacturing operation linked to its OEM
success, provides Logitech with a competitive advantage that we believe is unparalleled by its
competitors.
•Global Presence. Logitech is a global company capable of drawing upon the strengths of its global
resources, global distribution system and geographical revenue mix. With manufacturing facilities in
Asia, engineering teams in the U.S., Asia and Europe, major distribution centers in North America,
Europe and Asia, as well as with sales and marketing offices in major cities worldwide, the Company
has access to leading technology, markets, personnel and ideas from around the world. The Company
believes that by fostering a strong international culture, it is able to capitalize on the worldwide
marketplace by meeting the needs of customers in many countries.
Industry Overview
Increasingly affordable prices and wider availability of business, consumer and education applications have
created a very large installed base of personal computers. The market penetration of PCs and other information
access devices, already high in developed countries, is likely to increase worldwide.
In addition, continuing growth in processing power and communications bandwidth, the increased
accessibility of digital content and the pervasive access and use of the Internet, create opportunities for new
applications, new users and dramatically richer interactions between users and digital information.
These developments create new demands by users wanting to take full advantage of this increased
processing power, new applications and new technologies in an intuitive, productive, comfortable and convenient
manner.
Today’s PCs have evolved from productivity tools for word processing into affordable multimedia
appliances or “digital hubs” capable of creating and manipulating vast amounts of graphics, sound and video.
The interface devices sold with most new PCs are quite limited in the functionality they provide. This is
especially true where the need to offer new personal computers at low prices dictates basic, no-frills peripherals
such as a basic mouse and alphanumeric keyboard. Logitech believes the expanded capabilities of PCs, and the
large installed base, present a significant opportunity for companies that provide innovative personal interface
products for the computer, as basic input devices alone cannot effectively harness this new power and fully
enable many of the newest applications.
Therefore, on one hand, PC manufacturers continue to require large volumes of simple interface devices. On
the other hand, the after-market (that is, the market for peripheral upgrades and add-ons sold separately from the
basic PC) grows as consumers demand more function-rich interface tools, and as the PC plays an ever-increasing
role in the new digital lifestyle.
In addition, Logitech believes that trends established in the consumer electronics market, such as brand
identity, affordability, ease of installation and use, as well as visual appeal, have become important aspects of a
purchase decision when buying a PC and personal interface devices.
Personal interface device opportunities increasingly exist for non-PC platforms, such as video game
consoles, mobile phones and home entertainment systems. As these additional platforms deliver added
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