Logitech 2007 Annual Report Download - page 81

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Microsoft has significantly greater financial, technical, sales, marketing and other resources, as well as greater
name recognition and a larger customer base. We are also experiencing competition and pricing pressure for
corded and cordless mice and desktops from less-established brands, in the lower-price segments, which could
potentially impact our market share. The emerging notebook peripheral segment is also an area where we face
aggressive pricing and promotions, as well as new competitors that have broader notebook product offerings than
we do.
Video. Our competitors for PC Web cameras include Creative Labs, Philips and Microsoft, whose entry into
the product category made the competitive environment more intense. We are encountering aggressive pricing
practices, promotions and channel marketing on a worldwide basis, which may impact our revenues and
margins.
Microsoft is a leading producer of operating systems and applications with which our mice, keyboards and
webcams are designed to operate. As a result, Microsoft may be able to improve the functionality of its own
peripherals to correspond with ongoing enhancements to its operating systems and software applications before
we are able to make such improvements. This ability could provide Microsoft with significant lead-time
advantages. In addition, Microsoft may be able to offer pricing advantages on bundled hardware and software
products that we may not be able to offer.
Audio. Competitors in audio devices vary by product line. In the PC, mobile entertainment and
communication platform speaker business, competitors include Plantronics and its Altec Lansing subsidiary,
Creative Labs, and Bose Corporation. In the PC and console headset, telephony and microphone business, our
main competitors include Plantronics and its Altec Lansing subsidiary. With the acquisition of Slim Devices in
October 2006, we expanded our audio product portfolio to include network-based audio systems for digital
music. This is an emerging market, with several small competitors, as well as larger established consumer
electronics companies, like Sony and Philips.
Advanced Remote Controls. Our revenues and market share for personal peripheral devices for home
entertainment systems have expanded substantially in the last year. With many companies offering universal
remote controls, our success will likely attract more competition. Our competitors include, among others, Philips,
Universal Remote, Universal Electronics, RCA and Sony.
Gaming. Competitors for our interactive entertainment products include Intec, Mad Catz, Pelican
Accessories and Saitek Industries. Our controllers for PlayStation®also compete against controllers offered by
Sony.
Intellectual Property and Proprietary Rights
Intellectual property rights that apply to Logitech’s products and services include patents, trademarks,
copyrights and trade secrets.
We hold various United States patents and pending applications, together with corresponding patents and
pending applications from other countries. While we believe that patent protection is important, we also believe
that patents are of less competitive significance than factors such as technological expertise and innovation, ease
of use, and quality design. No single patent is in itself essential to Logitech as a whole. From time to time we
receive claims that we may be infringing on patents or other intellectual property rights of others. Claims are
referred to counsel, and current claims are in various stages of evaluation and negotiation. If necessary or
desirable, we may seek licenses for certain intellectual property rights. Refer also to the discussion in Item 3D
Risk Factors – “We may be unable to protect our proprietary rights. Unauthorized use of our technology may
result in the development of products that compete with our products.”
To distinguish genuine Logitech products from competing products and counterfeit products, Logitech has
used, registered, or applied to register certain trademarks and trade names in the U.S. and in foreign countries and
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