Logitech is a Swiss Company which, for many CE retailers, is a dream brand when it comes to product ranging and profitability, because of their consistency in delivering products year in year out that sell through.
They are also one of those brands that consumer electronics retailers want in their stores, because they manufacture basics such as a keyboard, mouse, and web cams, which is a high-churn category, that’s also profitable for CE retailers.
They also manufacture an extensive range of premium products spanning gaming, audio and communication, and are a key brand in the fast-growing home office category where the Company is looking to grow share next year, according to local management.
Talk to executives at JB Hi-Fi about Logitech, where a lot of their products are sold, and the word “innovators” keeps coming to the surface, whether it be premium gaming mouses, a bright yellow keyboard, headsets or a driving wheel and foot pedals for popular motorsport games.
An executive at The Good Guys said “Logitech is a trusted brand that’s there year in year out”.
I recently caught up with Damien Lepore who describes himself as Cluster Head & Managing Director at Logitech Australia. This is a business that is extremely secretive about their revenues, which is not surprising, considering they are a Swiss Company.
A search of ASIC reveals that one Logitech business entity operating in Australia had, as of March 2022, revenues of $20.5M which is a fraction of the overall revenues that Logitech generates in Australia.
This was up from the $19.01M generated in 2021.
Damien Lapore Logitech CEO.
Profit for the year fell from $1.06M to $800,000. There was no other information on their other revenue streams.
As for future growth, Lepore believes that growth will come from new products that connect people to digital and cloud experiences.
For forty years, Logitech has worked on delivering products that improve a consumer’s experiences around the personal computer (“PC”) platform. Then, through acquisition, they migrated into new markets via the acquisition of businesses such as Ultimate Ears, Jaybird, and Blue microphones.
Then there are Companies that most people wouldn’t know such as StreamLabs, Upicto, TT Design Labs, Intrigue Technologies and Slim Devices which have contributed to the development of new products for the Company, who now has a major foothold in the gaming market with their premium accessories.
Logitech management claim that, historically, Logitech’s business has been driven by the same trends that drove the adoption of desktop and laptop PCs for consumers and businesses, including the growth in affordable processing power, communications bandwidth, the increased accessibility of digital content, and the growing and pervasive use of the Internet for productivity, communication, and entertainment.
According to Lepore, the market in Australia going forward will be split between the work at home and office markets, with both markets buying a new generation of communication products along with content creation products, such as the Companies highly popular Blue Microphones that are being used for conference calls and social media blogging.
In the gaming market, Lepore, believes the rapid rise of esports and the growth of live streamers on platforms such as Twitch and broadcasters on platforms such as YouTube will continue to drive growth for both Logitech and retail partners.
They will also benefit from brands such as Samsung and LG Electronics now giving consumers access to Xbox Game Pass and thousands of online games.
Lepore said: “Hybrid work and learning are a growth market along with gaming and these are markets where we can add value.”
Also working for Logitech is the growth in demand for premium gaming PCs with these consumers investing in premium peripherals.
During COVID, shipments steadily increased and combined with increased interest in smaller, mobile computing devices (such as smartphones and tablets), the market for PC peripherals has significantly expanded resulting in Logitech delivering several new peripherals for users.
Logitech management claim that the adoption of hybrid work has increased the number of new workspaces, thereby creating expanded opportunities to attach multiple peripherals.
Consumers are also enhancing their tablet experience with a range of keyboards and cases that enable them to create, consume and do more with their tablets.
Another market that Logitech benefitted from during COVID lockdowns was the addressable education market for tablet keyboards and cases with children forced to work from home.
The growing adoption of cloud-based experiences in gaming, video and music is also a target for Logitech in 2023.
In the smart office market, the adoption of video everywhere – in large and small conference rooms and at home is a continuing trend that accelerated during the COVID-19 pandemic in the home, this played right into the hands of Logitech management who struggled to get supply at the peak of COVID lockdowns.
The Company now believe that video communication is a big growth market as people can conduct a video call from any of a variety of platforms – video-enabled rooms, PCs, laptops, and mobile devices such as tablets and smartphones – to any other platform.
This trend to embrace cloud video conferencing by businesses and institutions and, in particular, the growing adoption of remote work, learning, and in the future telemedicine, will drive sales of their Video Collaboration range of products.
Also working for Logitech is the fact that businesses both large and small are adapting video conferencing, which is increasingly being substituted for travel, because of high travel costs.
High-quality, face-to-face meetings using gear from the likes of Logitech eliminate the need to travel away from the office and this is saving many businesses tens of thousands as they cut out domestic and overseas travel while also leading to growth for Logitech.
Currently Qantas is charging $9,000 for a premium economy ticket and $25,000 for a business class ticket to the USA.
In their annual report, Logitech also sees cloud-based music services that have experienced growth across the industry, fueled by smartphones, tablets, and other connected devices, as a growth market.
Consumers are optimising their audio experiences on their tablets and smartphones with a variety of music peripherals including wireless mobile speakers and in-ear and other headphones.
Logitech claim that within the music category, the market for mobile speakers has matured and the integration of personal voice assistants has increased competition in the speaker category.
Consumers are increasingly listening with wireless earphones while they undertake activities such as sports and fitness.
The innovation in truly wireless headphones has led to growth in revenue for Logitech.
The new premium mantra at Logitech has seen the business scoop up industry awards for design during the past few years.
The business has been awarded 202 design awards during the past three fiscal years
Today Logitech is as much a design company as they are a product Company claims management.
“Design thinking and culture are used as a strategic and cultural differentiator. Design also helps to reduce product costs through increased collaboration between our design, engineering, and manufacturing teams” they claim.
As for 2023 products, we will have to wait for CES 2023 according to insiders.
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