Logitech 2007 Annual Report Download - page 14

U.S. HOUSEHOLDS WITH PVR U.S. HOUSEHOLDS WITH
DIGITAL CABLE OR SATELLITE
U.S. HOUSEHOLDS WITH HDTV
HARMONY GROWTH POTENTIAL IN U.S.
With Harmony
Without Harmony
Source: Logitech estimates based on available market data
our capabilities in this nascent market, in October 2006
we acquired the Mountain View, California-based Slim
Devices for $20 million plus a possible performance-based
payment tied to reaching future revenue targets. Slim
Devices has developed a solution that enables people
to enjoy high-quality digital music, in multiple rooms of
the home, regardless of whether the music is streaming
directly from the Internet, or from a PC, Mac®, or storage
device on the network. We’re excited about the potential
for this emerging category and believe it can be a strong
growth driver for us in the years to come.
Harmony: Ready for the Mass Market
Fiscal Year 2007 was an excellent year for our Harmony®
remotes, with sales up by 60 percent to $92 million. Our
unique database-based solution for universal remote
controls has placed us in the market-leading position
for the overall remote control category in the U.S. with
a market share exceeding 30 percent. Our key strategic
goal for our advanced universal remotes in FY 2007 was
to broaden their appeal to the “early majority” of mass-
market consumers. We invested signifi cantly to simplify
the Harmony experience with new software and Internet
applications. In addition to broadening the addressable
user-base through a more satisfying setup experience,
we also expanded our hardware portfolio with the
Harmony 1000. This top-of-the-line remote offers a color
touch screen to control infrared devices as well as devices
with Z-Wave™ technology such as light switches or high-
voltage alternating current (HVAC) systems.
Even with our initial success, we estimate the penetration
of Harmony remotes in the 59 million U.S. households with
digital cable or satellite is still less than 2 percent, an
indication of what we believe is a vast growth opportunity.
Beyond the U.S. market, we continue to roll out the Harmony
remotes in Europe and Asia Pacifi c.
Gaming: Strong Growth in PC Category—Ready to Ride
the Playstation3 Wave
Fiscal Year 2007 was a transitional period for our gaming
business, with sales up by 6 percent year over year to
$146 million. The transition was related to our peripherals
for gaming consoles, where sales declined by 38 percent.
This decline was due primarily to the transition from the
Playstation®2 to the Playstation®3, which was launched
during the latter part of our fi scal year. While we were
ready with offerings for the Playstation3 at launch, our
opportunity for strong growth in the category is largely
dependent on the size of the installed base of game
consoles. We expect that the Playstation3 installed base
will be substantial by Christmas 2007 and that sales of our
console gaming controllers should benefi t accordingly.
Fiscal Year 2007 was a great year for our PC gaming
business, with sales up 63 percent year over year. This
strong performance was driven primarily by the success
of products like our G15 Gaming Keyboard and our G25
Racing Wheel. We also added signifi cant innovation to
the gaming controller category with our Chillstream™
technology, which keeps gamers’ hands dry with a
proprietary built-in cooling fan.
Innovation is the Key: The Making of a Mouse
Our results in FY 2007 are the latest demonstration of
our ability to consistently deliver innovative products at
attractive, stable price points that allow us to reliably
grow our profitability. Our track record of productive
innovation has taught us that competitive breakthroughs
don’t just happen. They require a robust pipeline of new