Logitech 2014 Annual Report Download - page 165

We believe our future growth will be determined by our ability to rapidly create innovative products across
multiple digital platforms, especially for PC Gaming and accessories for mobility-related products, including
tablets, smartphones, Gaming and other mobile devices and for digital music, including wireless speakers, to limit
and offset the decline in our PC peripherals. We pursue growth opportunities in emerging markets, mobility-related
products, products for digital music and enterprise markets. The following discussion represents key trends specific
to each of our two operating segments, peripherals and video conferencing.
Trends Specific to our Peripherals Segment
PC Peripherals: Although the installed base of PC users is large, consumer demand for new PCs has declined
in recent years, and we believe it will continue to decline in future years. As a consequence, consumer demand for
PC peripherals is slowing, or in some cases declining. As the quality of PC-embedded webcams improves along
with the increasing popularity of tablets and smartphones with embedded webcams, we expect future sales of our
PC-connected webcams will continue to be weak (or continue to decline on a year over year basis). The PC Gaming
platform continues to show strong growth as online gaming and multi-platform experiences gain greater popularity
and gaming content becomes increasingly more demanding. We believe Logitech is well positioned to benefit from
the PC Gaming market growth.
Enterprise Market. We are continuing our efforts to create and sell products and services to enterprises. For
example, we have introduced the Logitech ConferenceCam CC3000e video conference solution designed for small
to medium conference rooms. Growing our enterprise peripherals business will continue to require investment in
selected business-specific products, targeted product marketing, and sales channel development.
Tablets and Other Accessories. The increasing popularity of smaller, mobile computing devices, such as
tablets with touch interfaces, have created new markets and usage models for peripherals and accessories. During
fiscal year 2014, we continued to expand and leverage our success in this category through the introductions of
keyboard folios for the iPad and iPad mini, and keyboard covers and folios for the iPad Air. During this time, we
also introduced keyboard folios for the Samsung Galaxy tablet as well as the Wired Keyboard for the iPad, designed
primarily for use in the classroom.
Mobile Speakers. We believe that digital music, the seamless consumption of digital audio content on mobile
devices, presents a growth opportunity for us. Many consumers listen to music as a popular entertainment activity,
fueled by the growth in smart phones, tablets, music services and Internet radio. We believe we have a solid
foundation of audio speaker solutions to satisfy consumers’ needs for music consumption, in the digital music
speaker space. We continue to invest in the UE brand and introduce innovative new products in this category such
as UE BOOM, a wireless speaker with 360-degree stereo sound.
OEM Business. Sales of our OEM mice and keyboards have historically made up the bulk of our OEM sales.
In recent years, there has been a dramatic shift away from desktop PCs and there continues to be significant
weakness in the global market for PCs, which has adversely affected our sales of OEM mice and keyboards, all of
which are sold with name-brand desktop PCs. We expect this trend to continue and for OEM sales to comprise a
smaller percentage of our total sales in the future.
Trends in Non-Strategic Peripherals Product Categories. Some of our other peripherals product categories
are experiencing significant market challenges. During the quarter ended December 31, 2012, we identified a
number of product categories that no longer fit with our strategic direction at that time. We will continue to evaluate
our product offerings and will exit those which no longer support our strategic direction.
ANNUAl REPORT
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