Logitech session

<![CDATA[Alex Vieux begins this session pointing out that 25 percent of CEOs in the Fortune 500 are foreign born, which tells us the United States is a great place, because it welcomes people and gives them opportunity, and that the IT industry is globalizing.
This session begins with an interview with Guerrino De Luca, CEO of Logitech, who says he was really excited about addressing the last inch problem.
20 percent of Logitech’s business is in Asia. Home penetration of the PC in the home in Asia is a key to Logitech’s recent growth. “We are very Chinese in culture — a third of our engineers are in Asia” even though the company is essentially European.
Alex asks: Will Apple survive?
Guerrino: No one asks that question anymore. Of course Apple will survive. While I was at Apple, I learned the cost of being arrogant. I also learned the enormous importance of products. Apple is the ultimate product company.
Alex: What is the mix of cultures in Logitech, technology or consumer electronics?
Guerrino: Consumers care about products. The key ingredient is not technology, but an understanding of what the consumer wants. So, I think we’re becoming more and more a consumer electronics company.
We’ve always used our products to build our brand. The band is an accessory and the product conveys what you stand for.
Alex: Are you threatened by competition from China?
Guerrino: We feel threatened from every angle. But…. our cost structure is Chinese. We can build these products as inexpensively as anyone on the planet. This forces us to keep running to stay ahead. We have to innovate all the time. That’s the nature of the business.
Microsoft has been in the mouse and keyboard business for 15 years and we’ve been hanging in there, sometimes ahead and sometimes right behind. We are also best buddies, because without the Wintel platform we would not exist — Microsoft is more of a partner than a competitor in the grand scheme of things. Microsoft decided to have mice and keyboards because they wanted to control the complete user interface experience.
Some companies, like Samsung and Sony, might become more interested in this space, but we have the scale to compete. Our market is not bigger than five or six billion dollars a year, and Logitech is a $1.2 billion company.
Compared to electronics companies, we are very competitive. The industry averages five or six points of margin while we average about 10 points.
Alex: Let’s turn to online gaming and the way people play changing — how does that impact the industry and the products.
Guerrino: We’ve chosen to connect with video game platforms, particularly PlayStation. Our business is growing, because gaming is going back to its roots through online, which makes gaming social again after a phase of development where computer gaming was largely solitary.
Sony is targeting girls and families, which are very important. Extending gaming beyond young men is an important trend.
Logitech has not invested in the applications and content in gaming and productivity, because it isn’t a good idea to diversify just for diversification’s sake. The company sells 100 million units a year, which is extraordinarily high volume in the IT industry. We will stay focused on devices and technologies that complement those devices. Logitech might provide services, but it won’t become a software product.
We try to be wherever consumers buy these kinds of devices. We’ve broadened our distribution over the past five years — 20 percent of product is sold by online retailers.
I believe acquisitions don’t work. We’ve made two acquisitions that worked, so we’re defying statistics. The reason they were successful is that we paid far less than the value we brought to the deal. It was not expensive for us, we were the right buyer. De Luca said he is looking at a few potential acquisitions.
Alex: Are you going to migrate from being a mouse company to being a Quickcam company?
Guerrino: The PC and mouse will be around for years. But more than 50 percent of our revenue comes from non-PC devices, especially in gaming.]]>