Zurich: As retailers stock up for Christmas, the No. 1 maker of computer mice is fighting to increase its share of the computer accessories market in an increasingly mouse-less world.
Founded in a farmhouse near the small Swiss town of Romanel-sur-Morges in 1981, Logitech’s star rose rapidly in the 1980s when it marketed the first modern computer mouse, developed at the nearby Swiss Federal Institute of Technology in Lausanne.
Since then the Swiss-American company has shipped more than a billion mice and introduced a successful line-up of PC accessories including keyboards, cameras and speakers.
But like many other household names in the industry, including Intel, Hewlett Packard and IBM , Logitech is having trouble adapting to a market increasingly dominated by the tablets and smartphones that make much of its product line redundant.
“There is no doubt that the industry of classic computers, which is a big part of our business, is changing,” Logitech’s president Bracken Darrell told Reuters, speaking from the company’s US headquarters in Newark, California.
After a dismal 2011/12 financial year, when Logitech issued back-to-back profit warnings and sacked its top management, the company promised investors a range of “explosive new products”.
The revamped line-up of audio products for both smartphones and tablets – including headphones, speakers, a WiFi-connected smart radio and a boombox – ultimately failed to grip the imagination, leaving many investors wondering about the company’s future growth prospects.
Logitech’s share price remains nailed below seven Swiss francs, against its historic high of 41.52 francs back in 2007, prior to Apple’s launch of the first generation iPhone and back when it was seen as the Apple of computer accessories.
“The products recently launched are solid but no real game changers,” said Credit Suisse technology analyst Chris Gretler.
The group’s shares took a fresh knock on 25 October, plunging more than 16 percent, when the company released a dismal set of second quarter numbers, reflecting sliding PC sales.
According to data from market research firm IDC, global PC shipments fell another 8.6 percent in the third quarter.
Year-on-year sales have been down in each of the company’s past four quarters.
“Two-thirds of Logitech’s business still depends on PC sales while customers spend an ever-increasing part of their budget on mobile computing,” said Andreas Mueller, technology analyst at Zuercher Kantonalbank (ZKB).
Although Logitech is catering increasingly to mobile users, the need for add-ons in this segment is much lower, he said.
Semir Saleh, 25, is a case in point. A video-designer from London who is in Zurich freelancing for Swiss internet companies, Saleh said he had very little use for accessories.
“The iPad comes with everything I need,” he said. “I use for instance Skype a lot. The new one even comes with a camera so there is no need to buy one.”
Nov 24, 2014