Logitech’s mission is to bring to market tools that enrich the interface between people and information.
Logitech is a provider of computer and tablet accessories. The company has two reportable product segments:
Peripherals – These include the following:
Mobile Speakers – Wireless Bluetooth speakers
Gaming – Gaming keyboards, mice, gamepads, headsets, and steering wheels
Video Collaboration – Video products and headset products that connect medium-sized and small user groups
Tablet & Other Accessories – Covers and keyboards for smartphones and tablets
Pointing Devices – PC-related mice, presenters, and touchpads
Keyboards & Combos – Keyboards and mice/keyboard combinations for different platforms
Audio-PC & Wearables – PC headsets, PC speakers, and in-ear headphones
PC Webcams – Webcam products
Home Control – Home automation and remote control products
Video Conferencing – These include scalable HD (high-definition) video communication endpoints, SaaS video service, video conferencing infrastructure appliances and software for large-scale deployments, and associated services.
Daniel Borel (Swiss) and Pierluigi Zappacosta (Italian) were graduadate students in computer science at Stanford University. Upon completing their studies, they partnered with Giacomo Marini, a longtime friend of Zappacosta’s, to work as consultants in software development in Switzerland. The team wanted to start its own software company; however, it was difficult for them to obtain venture capital funding for that purpose, so they considered hardware products instead.
They were drawn to the idea of computer mice because the devices served as a useful navigation aid for computer interfaces. In 1981 they acquired the U.S. distribution rights for a mouse developed in Switzerland. Finally gaining investor interest, they received backing and used it to set up a company called Logitech (a combination of the French term for software, “logiciel“, and the word “tech“). In 1982 the firm released the P4 Mouse, its first product, which was commercially successful.
More companies began manufacturing mice-controlled computers, and Logitech designed new products that could work with each. It could not afford to distribute its items in retail stores, so it advertised them in increasing numbers in newspapers, magazines, and trade journals dedicated to electronic technology. In 1984 the company got its big break when Hewlett-Packard requested a mouse for its computers. This vaulted Logitech into prominence, and it was soon signing contracts with Olivetti, DEC, and AT&T. It also designed a mouse for Apple’s new Macintosh computer.
The next few years saw a number of significant milestones. Logitech unveiled the first cordless mouse. It used its strong profits to expand its manufacturing capacity and global operations. It took on IBM as a client, its largest one to date. By 1988, its revenues climbed to $40 million and it went public. Over the next decade, Logitech grew its portfolio to include video communications products, interactive entertainment products, and audio products. Logitech has sold over 700 million mice.
Logitech has a mass market business model, with no significant differentiation between customer segments. The company markets its products to anyone needing computer peripherals.
Logitech offers three primary value propositions: innovation, cost reduction, and brand/status.
The company has demonstrated a strong ability to develop innovative products. This is evidenced by the fact that it has achieved more than 100 industry “firsts” and maintains a portfolio of more than 750 patents. Also, in 2015 four of its products were chosen as Innovation Award honorees at the annual, prestigious Consumer Electronics Show (CES).
The company offers significant cost reduction to one of its key customer groups, academic institutions. Specifically, it maintains “Logitech Academy”, a program through which it grants discounts to university students and staff in the U.S. Recipients can save up to 20% on purchases.
The company has created a strong brand because of its success. This is evidenced by the fact that it has won numerous awards and honors. Forms of recognition include numerous International Design Awards, iF Product Design Awards, Red Dot Awards, and American Technology Awards.
Logitech’s main channel is its direct sales team, members of whom sell its products to a network of retailers and distributors. Distributors resell the items to retailers, systems integrators, and value-added resellers. Retailers include mass merchandisers, telecommunications and computer stores, and specialty electronics stores.
Specific distributors include Tech Data Corporation, Synnex Corporation, Ingram Micro, D&H Distributing, Beijing Digital China Limited, and Daiwabo. Specific retailers include Wal-Mart, Office Depot, Best Buy, Staples, Target, Metro Group, Carrefour Group, Dixons, Kesa Electricals, and Australia's Dick Smith Electronics Limited. Logitech also sells its products through online retailers such as Buy.com, Insight Enterprises, Amazon.com, and TigerDirect.com.
Beyond the direct sales channel, Logitech also promotes its products through its website, social media pages, advertising, and attendance at trade shows.
Logitech’s customer relationship is primarily of a self-service nature. Customers utilize its products while having limited interaction with employees. The company’s website features numerous resources designed to address any consumer concerns, including product manuals, articles, white papers, answers to frequently asked questions, and access to a newsletter with news and product tips/tricks. That said, there is also a community component in the form of forums where peers can answer questions, and a personal assistance element in the form of phone, e-mail, and chat support.
Logitech’s business model entails designing, developing, and manufacturing its products. The company maintains a hybrid model that involves both in-house manufacturing and third-party contract manufacturing. This arrangement enables it to leverage economies of scale and respond effectively to quickly changing demand. Half of its peripherals are produced at facilities located in Suzhou, China, while the remaining products are made at other locations in Asia.
Logitech operates the Logitech Partner Program through which it teams with manufacturers, resellers, and authorized distributors to sell its products to other parties. Benefits of the program include quarterly rebates, exclusive purchase discounts, and marketing tools and resources. Members also receive early notification of pending new products.
Logitech’s main resource is its engineering team, which seeks out new innovations for it to develop and bring to market. Other key resources include the company’s marketing team, which promotes its brand, and its direct sales team, which acquires new customers.
Logitech has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. Its biggest cost driver is cost of goods sold, a variable cost. Other major drivers are in the areas of sales/marketing, administration, and research and development, all fixed costs.
Logitech has one revenue stream, the earnings it generates from the sale of its products. The company indicates that a majority of revenues are obtained through the sale of items in the peripheral category to consumers (as opposed to businesses or other institutions).
Guerrino De Luca,
info: Guerrino earned a B.S. in Electronic Engineering from the University of Rome, Italy. He previously served as President and CEO of Logitech. He oversees the firm‘s strategy and performance. He has over 30 years of tech industry experience in Europe and the U.S.
Bracken P. Darrell,
President and CEO
info: Bracken earned an MBA from Harvard Business School and a B.A. in English from Hendrix College. He previously held executive management positions at Whirlpool, General Electric, and Procter & Gamble. He oversees Logitech’s growth and profitability.
Chief Financial Officer
info: Vincent earned an M.S. in Engineering and Business from Université Catholique de Louvain in Belgium and an MBA from Northwestern University. He previously served as CFO of Electronics for Imaging. He leads Logitech’s global finance organization.
L. Joseph Sullivan,
SVP, Worldwide Operations
info: Joseph earned a B.S. and B.A. in Marketing Management and an MBA from Suffolk University in Massachusetts. He previously held manufacturing management roles at ACCO Brands. He has 25 years of experience in operations.
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