Logitech 2007 Annual Report Download - page 80

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Customer Service and Technical Support
Logitech maintains customer service and technical support operations in the United States, Canada, Europe,
Asia and Australia. Customer service and technical personnel provide support services to retail purchasers of
products through telephone, email, facsimile and the Logitech Web site. This site is designed to expedite overall
response time while minimizing the resources required for effective customer support. In general, OEMs provide
customer service and technical support for their products, including components purchased from suppliers such
as Logitech. Logitech provides warranties on our branded products which range from one to five years.
Manufacturing
Logitech’s manufacturing operations consist principally of final assembly and testing. Our high-volume
manufacturing is located in Suzhou, China. We expanded our Suzhou operations in 2005 with the construction of
a new factory to provide for additional production capacity to meet future demand. This facility has 30% greater
capacity than our first factory with the potential to double beyond that. The Suzhou facilities are designed to
allow production growth as well as flexibility in responding to changing demands for Logitech’s products. We
continue to focus on ensuring the efficiency of the Suzhou facilities, through the implementation of quality
management and employee involvement programs.
New product launches, process engineering, commodities management, logistics, quality assurance,
operations management and management of Logitech’s contract manufacturers occur in Hsinchu, Taiwan,
Suzhou, China and Hong Kong, China. Certain components are manufactured to Logitech’s specifications by
vendors in Asia, the United States and Europe. We also use contract manufacturers to supplement internal
capacity and to reduce volatility in production volumes. In addition, some products, including most keyboards,
certain gaming devices and audio products, are manufactured by third-party suppliers to Logitech’s
specifications. Retail product localization with local language manuals, packaging, software CDs and power
plugs is performed at distribution centers in North America, Europe and Asia Pacific.
Competition
Our industry is intensely competitive. It is characterized by short product life cycles, continual performance
enhancements, and rapid adoption of technological and product advancements by competitors in our retail market
and a trend of declining average selling prices in the OEM market. We continue to experience aggressive price
competition and other promotional activities from our primary competitors and from less-established brands, and
we may choose to adjust prices or increase other promotional activities to improve our competitive position. We
may also encounter more competition if any of our competitors decide to enter other markets in which we
currently operate.
In addition, we have been expanding the categories of products we sell, and entering new markets, such as
the market for programmable remote controls and streaming media devices. As we do so, we are confronting new
competitors, many of which have more experience in the categories or markets and have greater marketing
resources and brand name-recognition than we have. In addition, because of the continuing convergence of the
markets for computing devices and consumer electronics, we expect greater competition in the future from well-
established consumer electronics companies in our developing categories, as well as future ones we might enter.
Many of these companies have greater financial, technical, sales, marketing and other resources than we have.
We expect continued competitive pressure in both our retail and OEM business, including in the terms and
conditions that our competitors offer customers, which may be more favorable than our terms and conditions and
require us to take actions to increase our customer incentive programs, which could impact our revenues and
operating margins.
Corded and Cordless. Microsoft is our main competitor in retail cordless (mice and desktops) and corded
(mice and keyboards) categories. Microsoft’s offerings include a complete line of mice, keyboards and desktops.
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