CASE 1 Logitech (Mini Case) Alan N. Hoffman Company Background LOGITECH, HEADQUARTERED IN ROMANEL-SUR- MORGES, SWITZERLAND, was the world's leading provider of computer peripherals in 2010. Personal computer peripherals were input and interface devices that were used for navigation Internet communications, digital music, home entertainment control. gaming, and wireless devices. Derived from the French word logiciel, meaning software, Logitech was originally established as a software development and hardware architecture company by two Stanford graduate students in Apples, Switzer land. Shortly after establishing itself as a quality software development company, Logitech saw a new hardware product opportunity that was emerging in the mid 1980s, the computer mouse. The mouse was standard equipment on the original Macintosh computer launched in January 1984. Logitech viewed the mouse as a growth opportunity and it became a tuming point for the company's future. Logitech introduced its first hardware device, the P4 mouse, for users of graphics software. An OEM sales contract with HP followed, and in 1985 iten- tered the retail market, selling 800 units in the first month. In July of 1988. Logitech's executives decided to take the company public to help finance its rapid growth. Then, in the early 1990s, while facing increasingly strong competition in the mouse business, Logitech identified a larger market opportunity for computer peripherals and began growing its business beyond the mouse. In the next few years, Logitech introduced products such as (1) computer keyboards, 2) a digital still camera ) aheadphone/microphone, (4) a joystick gaming peripheral and (5) a web camera on a flexible arm. While these new products were being introduced under the Logitech name, the company also continued innovation in its core mouse i nd This app by lody UC3010 Rachad M They Edition and the n clic ooh Ala Asyacher this Rapid by mather than Decent Comm SMC Deca her cari c hi e nti video Cari 2010 RSMC praded 11-1 11-2 SECTION D Industry One-Information Technology business. New and revolutionary technologies that were being developed by Logitech allowed it to continue to be an industry leader in the mouse and keyboard business In the mid- 1990s, the PC market exploded due to the popularity of the Internet and new home office software applications. This growth of the PC industry created demand for the peripheral products that Logitech produced. The Internet allowed computer users to access new areas such as music, video, communications, and gaming. From this point forward. Logitech continued to grow both organically and through acquisition as new opportunities arose to expand its portfolio of products. Between 1998 and 2006, Logitech made a number of significant acquisitions to expand its product portfolio. It acquired companies such as Connectix for its line of webcams, Labtec for its audio business presence, Intrigue Technologies for its Harmony remote controls, and Slim Devices for its music systems. All of these acquisitions were done strategically to help Logitech position itself in all aspects of the personal computer peripherals world In addition to growing significantly through strategic acquisitions, Logitech also continued to innovate and grow its core business. Logitech made significant innovations in the area of cordless mice and keyboards. It also introduced the industry's first retail pointing device with Bluetooth wireless technology. Logitech then expanded its Bluetooth technology to many other products in the digital world such as cordless gaming controllers and a personal digital pen. Logitech provided consumers with cutting-edge innovation while maintaining its product quality. Logitech maintained its product leadership by combining continued innovation award-winning industrial design, and excellent price performance with core technologies such as wireless, media-rich communications and digital entertainment. Competitors Within the specialized personal peripherals industry, Logitech had three major competitors Creative Technology Lad., Microsoft Corporation, and Royal Philips Electronics N.V. Creative Technology Lad. was one of the worldwide leaders in digital entertainment prod- ucts for the personal computer (PC) and the Internet. Creative Technology was founded in Singapore in 1981, with the vision that multimedia would revolutionize the way people inter- act with their PCs. The product line offered by Creative Technology included MP3 players, portable media centers, multimedia speakers and headphones, digital and web cameras, graphics solutions, revolutionary music keyboards, and PC peripherals. Creative had a net profit margin of(-29.58%) in FY 2009 and (-32.829) in the first quarter of 2010. Microsoft Corporation provided software and hardware products and solutions world- wide. Founded in 1975 by Bill Gates and Paul Allen, Microsoft's core business was to create operating systems and computer software applications. Microsoft expanded into markets such as mice, keyboards, video game consoles, customer relationship management applications, server and storage software, and digital music players. In FY 2009, Microsoft Corporation had annual sales of $58.4 billion and a net income of $14.5 billion. Royal Philips Electronics was a Netherlands-based company that focused on improving people's lives through innovation Philips was a well-diversified company with products in many different businesses: consumer electronics, televisions, VCRS, DVD players, and fax machines, as well as light bulbs, clectric shavers and other personal care appliances, medical systems, and silicon systems solutions. With this diversified portfolio of products, Royal Philips had FY 2009 revenues of $30.76 billion and a gross profit of $11.59 billion Logitech was the only company exclusively focused on personal computer peripheral products, whereas all of its competitors had products and resources invested in a variety of other industries as well CASE 11 Logitech (MilCase) 11-3 Trends Logitech implemented a strategy of innovation, mixed with strategic acquisitions, to enhance its products with the technologies and software of other companies in order to create the most advanced, safest, and most innovative and collaborative experience for its customers. As Logitech had always been on the forefront of mouse and keyboard technology, it had also been a leader in video conferencing technology since the early stages of the Logitech mount able computer camera From 1998-2004, Logitech made many important strategic acquisitions in order to enhance future portfolios and expand the depth of the peripheral product lines. Its first acqui sition was the video camera division, QuickCam PC of Connectix Corporation. This led to an influx of peripherals such as cameras and wireless cameras, and served as a very early intro duction to the current video