Logitech Still Sees Opportunity in Remotes Despite Rise of Smartphone Apps

Following a 2011 holiday sales season where “I've never been so unimpressed by a product portfolio,” Logitech CEO Guerrino De Luca is looking to new design and packaging this year to refresh the line, he said at a Morgan Stanley conference Tuesday in Boston. There was a “misplacement of the value of our products,” De Luca said. “We make products that nobody needs but people want,” De Luca said, “and if our products aren’t wanted, they don’t buy them.” Over the past 2-3 years, Logitech made a couple of “mistakes,” De Luca said, including its Google TV Revue product, which was the fault of Logitech, not Google TV, he added. “We went after it like it was sliced bread, and it wasn’t,” he said.

While acknowledging that a company that wants to grow will make mistakes, De Luca said, Logitech’s core mistake was to lose the essence of Logitech in making products people want to buy. A repositioning of the product portfolio has reduced the number of SKUs and brought some products to market faster than anticipated, he said, and the company is planning an October launch in time for the holiday sales season that includes two video products for mature markets “that are not PC webcams.” The new products will leverage company knowledge with video compression and audio for different markets, he said. And compared with last year’s disappointing Christmas lineup, this year De Luca said he will find 15 products “that I actually like."

In the recent past, De Luca said, Logitech didn’t have the right offerings to prove “whether the PC will win or tablets will win or whether Apple, Android or Windows 8 will win.” Logitech’s position is “neutral,” he said, because the company can serve all the markets with accessories for different products and platforms. He referred to a $99 Bluetooth cover/keyboard the company recently introduced for tablets as a product that’s headed in the right direction.

In response to an analyst comment on product categories that have “gone away from” Logitech’s core product line, including webcams and remote controls, De Luca conceded that the webcam category is “challenged,” but said it’s the only home category that is struggling. Distinguishing between mature and emerging markets, De Luca noted that webcam accessory sales plummeted in the U.S. because most laptops and tablets come embedded with a webcam that consumers are largely satisfied with. While core webcam business isn’t growing in mature markets, it is increasing in emerging markets and the business market, he said.

On remote controls, De Luca blamed a sales decline on Logitech product positioning. The company drove its Harmony line of remote controls to the masses, he said, where the products didn’t carry the same value as it did with tech enthusiasts. The mass market customer makes more calls to customer service and “when sold for $30 you can’t afford those calls,” De Luca said. The $150 Harmony One is “the ideal Harmony,” he said, but it’s four years old and needs a refresh, he said.

Despite a changing market, with smartphone apps and with more AV products becoming IP-enabled, there’s still a solid market for dedicated remote controls, De Luca maintained. He disputed that a smartphone can replace a dedicated remote control like Harmony because consumers don’t want to have to switch between functions on their smartphones to answer a call or change volume. And while the increasing number of IP-enabled AV products in the living room are lending themselves to a different kind of remote platform, television set-up “will remain complicated,” De Luca said, “and you will want to have a device that makes your life easier.” Harmony’s ability to control devices using macros combining functions of products from different manufacturers will be essential to customer satisfaction, he said.

Audio business remains strong for Logitech and De Luca believes PC speakers -- driven by music and gaming -- will continue to do well. The primary focus for the company now is mobile phones, he said. “We believe you will live with music on your phone,” and the company plans to provide everything consumers need “to take music out of the phone.” Regarding Logitech’s legacy OEM mice and keyboard business, De Luca said it’s not growing, but Logitech has the vast majority of market share in the category and will remain in it as long as it’s profitable.