Logitech 2015 Annual Report Download - page 122

Trends Specific to our Peripherals Segment
Mobile Speakers: The mobile speaker market grew throughout fiscal year 2015 based on consumer
smartphones, consumption of music through tablets, and the growth of music services and Internet radio.
This market growth, together with our investments in the UE brand, our introduction of new products and
our ability to gain market share during fiscal year 2015, has driven our growth in Mobile Speakers.
PC Peripherals (Pointing Devices, Keyboards & Combos, PC Webcams, Gaming and Audio PC
& Wearables): Although the installed base of PC users is large, consumer demand for new PCs has
declined in recent years, and we believe it will continue to decline in future years. As a consequence,
consumer demand for PC peripherals is slowing, or in some cases declining. As the quality of PC-
embedded webcams improves along with the increasing popularity of tablets and smartphones with
embedded webcams, we expect future sales of our PC-connected webcams will continue to be weak (or
continue to decline on a year-over-year basis). The PC Gaming platform continues to show strong growth
as online gaming and multi-platform experiences gain greater popularity and gaming content becomes
increasingly more demanding. We believe Logitech is well positioned to benefit from the PC Gaming
market growth.
Enterprise Market: We are continuing our efforts to create and sell products and services to
enterprises, including Video Collaboration products. For example, we have introduced the Logitech
ConferenceCam CC3000e video collaboration product. Growing our enterprise peripherals business will
continue to require investment in selected business-specific products, targeted product marketing, and
sales channel development.
Tablets and Other Accessories: Smaller mobile computing devices, such as tablets with touch
interfaces, have created new markets and usage models for peripherals and accessories. We offer a
number of products to enhance the use of mobile devices, including keyboard folios for the iPad and
iPad mini, and keyboard covers and folios for the iPad Air. We have also introduced keyboard folios for
the Samsung Galaxy tablet. While we achieved growth in sales of our tablet covers for the iPad, we have
seen the market decline through fiscal year 2015 for the iPad platform, which has impacted the sales of
our tablet peripherals.
OEM Business: Sales of our OEM mice and keyboards have historically made up the bulk of our
OEM sales. In recent years, there has been a dramatic shift away from desktop PCs and there continues
to be weakness in the global market for PCs, which has adversely affected our sales of OEM mice and
keyboards, all of which are sold with name-brand desktop PCs. We expect this trend to continue in the
future, and we plan to exit the OEM business as we see limited opportunities for profitable growth.
Trends in Non-Strategic Peripherals Product Categories: We continue to evaluate our product
offerings and exit those which no longer support our strategic direction.
Trends Specific to our Video Conferencing Segment
The trend among businesses and institutions to use video conferencing offers a long-term growth
opportunity for us. However, the overall video conferencing industry has experienced a slowdown in
recent quarters. In addition, there has been an increase in the competitive environment. Lifesize is in
the early stages of transitioning its product portfolio to Lifesize Cloud. While sales of this software-as-
a-service offering are growing rapidly, they are not yet large enough to offset the combination of the
short-term portfolio transition and soft market conditions for video conferencing infrastructure. Looking
at this growth opportunity, recently in April 2015, we decided to reorganize Lifesize with the goal of de-
emphasizing Lifesize’s legacy offerings more quickly to enable maximum traction with Lifesize Cloud. We
plan to shrink our Lifesize business to grow the Cloud opportunity faster. This resulted in an estimated
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Annual Report Fiscal Year 2015