Logitech 2006 Annual Report Download - page 76

Strength on the Desktop
As it broadens its product portfolio beyond the PC platform, Logitech has also continued to expand its
presence on the PC desktop, with its product portfolio encompassing a broader range of personal peripherals that
people use everyday as they work, communicate and play at their PC. The Company’s personal peripherals bring
together on the desktop a broad variety of products that individuals – business people, home users, gamers and
others – need to make their time on the Internet and time at the computer more productive, comfortable and
enjoyable. As a result, the Company is positioned to offer “one-stop shopping” for peripherals that have been
designed to work seamlessly together.
Industry Overview
Increasingly affordable prices and wider availability of business, consumer, education, and communication
applications have created a very large installed base of personal computers. Logitech believes that 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 can be 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 an alphanumeric keyboard. Logitech believes the expanded capabilities of PCs, and
the large installed base, present a significant opportunity for companies that provide innovative personal
peripheral products for the computer, as basic input devices alone do not fully enable many of the newest
applications.
Therefore, on one hand, PC manufacturers continue to require large volumes of simple personal peripherals.
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 personal peripheral tools, and as the PC plays an
increasing role in the new digital lifestyle.
In addition, Logitech believes that trends established in the consumer technology 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 peripherals.
Logitech believes similar industry dynamics and personal peripheral device opportunities exist for non-PC
platforms, such as video game consoles, mobile entertainment and communication devices, and home
entertainment systems. As these additional platforms deliver new functionality, increased processing power and
growing communications capabilities, Logitech expects demand to increase for add-on, complementary devices,
connected to these platforms. The product expertise Logitech has developed around the PC platform extends to
these other platforms as well and provides further opportunity for growth and leverage.
Business Strategy
Logitech’s objective is to strengthen its leadership in the growing market for personal peripherals, linking
people to the digital world wherever and whenever they need to access digital information to communicate, learn
and play. The Company has historically served the installed base of PCs by offering innovative personal
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