Written off two years ago Swiss accessories Company Logitech has witnessed significant turnaround with the Company attributing tablets and wireless audio as major categories that helped the Company dig themselves out of a slump caused by poor product investment and a declining PC market.
14 months Bracken Darrell took over as President since then Logitech’s stock price has risen 134 percent.
A major saviour for the Company has been wireless audio technology and a new generation of wearables. Wireless general manager Rory Dooley claims that the continued strength of the portable audio market and the success of the company’s first wireless speaker, the Ultimate Ears Boom, which debuted in 500 and is now in 10,000 stores worldwide, including over 1000 in Australian stores has contributed to the Company’s turnaround.
“The line between tech and non-tech is blurring [and] new lifestyle retail outlets are emerging as promising new channels,” he said at last night’s analyst briefing in New York.
Logitech claims the portable wireless speaker market has generated $1.8 billion in revenue during the past 12 months Dooley predicted the market would nearly double to $3.3 billion in fiscal 2015 which would surpass the docking speaker market’s peak of $2.2 billion in 2012.
Dooley said that the growing adoption of streaming music services would increase consumption of digital music on mobile devices and said that even a modest level of attachment sales of speakers with phones and tablets could triple the global portable speaker market by 2017.
In Australia Logitech is refusing to say how much growth the Company is experiencing claiming that there is a Company edict to not talk about the Australian market in isolation.
Logitech has told TWICE Magazine in the USA that their turnaround strategy remains focused on deemphasising the company’s presence in declining markets such as traditional PC accessories and staying “laser-focused” on three main growth opportunities for the company’s accessories business: keyboards and cases for tablets, high-end prosumer gaming peripherals, and the company’s entry into the exploding wireless speaker market.
The Company said that they will introduce fewer products in 2014, spending more resources on innovation and product design in the three main growth categories, with an eye on sustained growth in profit margin, already underway.
The Company claims that they are the only keyboard case supplier with suspend/resume magnets on retail shelves on the day the iPad Air became available, earning it worldwide placement in Apple Stores.
Logitech accessories general manager Mike Culver claims that the Company is looking for growth in tablet shipments across all OS types in fiscal 2015 and predicted an accelerating rate of consumer acceptance for larger-screen models, such as Samsung’s 12-inch Galaxy Note Pro, the upcoming 12.2-inch Galaxy Tab Pro, and Windows 8 tablets from Dell and Lenovo, among others.
Culver said Logitech expects attachment rates for keyboards for the new larger Android and Windows models to be much higher than that of the iPad as size and functionality begin to more closely rival that of a laptop, further opening the enterprise and productivity channels.
Logitech has captured 51 percent of the Apple tablet keyboard unit market share in the past calendar year, based on data from The NPD Group. During his presentation, Culver cited consumer surveys that show that typing on a physical keyboard remains the most preferred and efficient input method for more than short messages.
Gaming general manager Ehtisham Rabbani told analysts that “Traditionally you were either a PC gamer or a console gamer and whichever you were, you hated the other,” he said, “but that is no longer true.” He presented NPD statistics showing year-over-year monthly PC gaming peripheral sales growing between 21 percent and 32 percent while console gaming accessories jumped 43 percent with the launch of the Xbox One and PlayStation 4 during the 2013 holiday shopping season.
The company sees big potential in iOS game controllers especially, but warned that the market is at a very early stage of consumer adoption. However, Rabbanni said, Logitech is well positioned to adapt to this potentially large new market.
Logitech said it has also taken steps to maximize profits in its legacy categories, including keyboards and pointing devices, PC and wearable audio, webcams and remotes, which combined made up about $6 billion of the total worldwide accessories market in 2013. The company sees those combined categories declining closer to $5 billion by 2016.
Logitech’s stock price has risen 134 percent in the last 12 months.
