Logitech 2003 Annual Report Download - page 123

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the Company’s engineering launch site in Taiwan to its high volume manufacturing site in China.
Logitech’s Vancouver, Washington engineering center designs and develops all of the Company’s audio
products. The facility specializes in acoustic research and development, including model and simulation work. Areas
of development cover cordless audio applications, demanding applications for audio input such as voice recognition,
and audio output for PC speakers. Test capabilities include theoretical environments in an anechoic chamber, real-
world environments for office settings, and pre-compliance testing.
The Company’s subsidiary, 3Dconnexion, whose research and development facility is located in Seefeld,
Germany, provides the Company with its ongoing research in 3D controller devices. The location of the facility
provides Logitech with access to Germany’s leading automotive manufacturers who are also important 3Dconnexion
customers. In addition, this facility is in close proximity to the Munich office of the German Aerospace Center, a
leading research center in robotics and from whom we have licensed some of our 3D technology.
The Company's research and development expenses for fiscal years 2003, 2002 and 2001 were $56.2 million,
$50.5 million and $36.7 million. The Company expects to continue to devote significant resources to research and
development to sustain its competitive position.
Marketing, Sales and Distribution
The primary end-user markets for Logitech mice, trackballs and keyboards are consumers, small office and home
office ("SoHo") users, and, through its OEM customers, corporate buyers. The primary end user market for Logitech
entertainment devices, such as joysticks, gamepads and steering wheels, is consumers. The primary end-users for
Logitech’s audio products are consumers, SoHo, and OEM customers. The Company’s end user markets for its PC
video cameras are SoHo users, corporate buyers and consumers. Logitech's primary end user markets are in North
America, Europe and Asia-Pacific. However, it also markets its products in Latin America, the Middle East, Africa
and other regions.
Logitech builds awareness of its products and brand through targeted advertising, public relations efforts, in-store
promotions and merchandising, a worldwide website and other efforts. It also develops knowledge of its end users
through customer feedback and market research, including focus groups, product registrations, end user
questionnaires, primary and multi-client surveys and other techniques. In addition, manufacturers of PCs and other
products also receive customer feedback and perform end user market research, which sometimes result in specific
requests to the Company for specific products, features or enhancements.
Logitech sells through many distribution channels, including distributors, OEMs and regional and national retail
chains, including online retailers. The Company supports these retail channels with distribution centers located in the
United States, Europe and Asia. These centers perform final configuration of products and product localization with
local language manuals, packaging, software CDs and power plugs. In addition, Logitech’s distribution mix includes
electronic commerce in the U.S. as well as e-commerce capabilities in several European countries.
Logitech sells to large OEM customers through a direct sales force and supports smaller OEM customers through
distributors. The Company counts the majority of the world’s largest PC manufacturers among its customers.
In retail channels, Logitech's direct sales force sells to distributors and large retailers. Its distributor customers
typically resell products to retailers, value-added resellers, and system integrators with which Logitech does not have
a direct relationship. These distributors in the U.S. include Ingram Micro Inc. and Tech Data Corporation, and in
Europe include Tech Data Corporation, Ingram Micro, Actebis and many strong national distributors such as Banque
Magnetique in France.
Logitech’s products can be found in major retail chains, where they typically enjoy access to significant shelf
space. These chains in the U.S. include Best Buy Co., Inc., CompUSA, Inc., Office Depot, Inc., Staples, Inc., Target
and Wal-Mart, and in Europe include Media Markt, Carrefour, FNAC, Dixons Stores Group PLC and most key
national consumer electronics chains. Logitech products also can be found at the top online etailers, which include
Amazon.com, Buy.com, CDW, Insight, MicroWarehouse, and others.
Through its operating subsidiaries, the Company maintains sales offices or sales representatives in over 20
countries, and throughout the United States.
Principal Markets
The Company operates in one business segment, which is the design, development, production, marketing and
support of personal interface devices.