Logitech 2007 Annual Report Download - page 60

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market, and a trend of declining average selling prices in the OEM market. We continue to experience aggressive
price competition and other promotional activities from our primary competitors and from less-established
brands, and we may choose to adjust prices or increase other promotional activities to improve our competitive
position. We may also encounter more competition if any of our competitors decide to enter other markets in
which we currently operate.
In addition, we have been expanding the categories of products we sell, and entering new markets, such as
the market for programmable remote controls and streaming media devices. As we do so, we are confronting new
competitors, many of which have more experience in the categories or markets and have greater marketing
resources and brand name recognition than we have. In addition, because of the continuing convergence of the
markets for computing devices and consumer electronics, we expect greater competition in the future from well-
established consumer electronics companies in our developing categories, as well as future ones we might enter.
Many of these companies have greater financial, technical, sales, marketing and other resources than we have.
We expect continued competitive pressure in both our retail and OEM business, including in the terms and
conditions that our competitors offer customers, which may be more favorable than our terms and conditions and
may require us to take actions to increase our customer incentive programs, which could impact our revenues and
operating margins.
Corded and Cordless. Microsoft is our main competitor in retail cordless (mice and desktops) and corded
(mice and keyboards) categories. Microsoft’s offerings include a complete line of mice, keyboards and desktops.
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.
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.
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
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