Logitech 2003 Annual Report Download - page 32

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Net sales to unaffiliated customers by geographic region were as follows:
2003 2002 2001
Europe..................................................................................... 487,762$ 413,348$ 334,414$
North America......................................................................... 435,612 389,949 278,935
Asia Pacific............................................................................. 176,914 140,249 122,200
Net sales.................................................................................. 1,100,288$ 943,546$ 735,549$
Year ended March 31,
(In thousands)
Customer Service and Technical Support
Through its operating subsidiaries, the Company maintains customer service and technical support operations in
the United States, Europe, Asia and Australia. Customer service and technical personnel provide support services to
retail purchasers of products via telephone, 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. The Company provides a one to five year warranty on its branded retail products.
Manufacturing
The Company's manufacturing operations consist principally of final assembly and testing. Logitech's high-
volume manufacturing is located in Suzhou, China. The Suzhou facilities are designed to allow production growth as
well as flexibility in responding to changing demands for the Company's products. The Company continues to focus
on improving the efficiency at the Suzhou facilities, including the implementation of total quality management and
total employee involvement programs.
New product launches, process engineering, commodities management, logistics, quality assurance, operations
management and management of our original design manufacturers occur in Hsinchu, Taiwan, Suzhou, China and
Hong Kong, China. Certain components are manufactured to the Company's specifications by vendors in Asia, the
United States and Europe. Logitech also utilizes contract manufacturers to supplement internal capacity, to reduce
volatility in production volumes and to reduce the transit time from final assembly to regional distribution centers. In
addition, certain products, including keyboards, certain gaming devices and our audio products, are manufactured by
third-party suppliers to the Company's specifications. Retail product localization with local language manuals,
packaging, software CDs and power plugs is performed at distribution centers in the United States, Europe and Asia.
Competition
Our industry is intensely competitive. It is characterized by a trend of declining average selling prices in the
OEM market, performance enhancements and new features of competing retail products, and increased price
competition from less established brands.
Microsoft is our main competitor in retail pointing devices, keyboards and PC gaming devices. Microsoft’s
offerings include a complete line of mice, trackballs and keyboards including cordless mice and desktops. Microsoft
has significantly greater financial, technical, sales, marketing and other resources, as well as greater name recognition
and larger customer base, than we have. In particular, we face potential revenue and margin impacts from
Microsoft’s aggressive pricing strategies as well as their promotions and channel marketing. We are also
experiencing increased competition for corded and cordless mice and desktops from less established brands, in the
lower price segments.
Microsoft is a leading producer of operating systems and applications with which our pointing, keyboard and
gaming devices are designed to operate. As a result, Microsoft may be able to improve the functionality of its
pointing, keyboard and gaming devices 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 for product development. In addition, Microsoft may be able to offer pricing
advantages on bundled hardware and software products that we may not be able to offer.
Our main competitors in the U.S. for PC video cameras are Creative Labs and Veo. In Europe, our main
competitors are Philips and Creative Labs. We are also experiencing increased competition from less established
brands in PC video cameras that are seeking shelf space and increased market share through price competition.