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Logitech to discontinue low-cost OEM mice for turnkey PCs
Logitech, one of the world’s leading manufacturers of PC and mobile peripherals, recently announced that it will discontinue low-cost OEM mice that the company sells to PC makers and which occasionally appear in retail. Going forward, Logitech will focus on expensive manipulators that it sells through retail channels.
The computer mouse is the product that made Logitech famous in the eighties of the last century. Since then, the company has introduced a range of innovative robot arm technologies, and has also invested heavily in ergonomics and design. It is thanks to the ergonomics and high quality of products that Logitech mice became the most popular in the world in the nineties, increasing the gap from a number of competitors in the two thousandth. One of the reasons Logitech mice were the most widely used is because they came with pre-built PCs and were also available in retail. The desktop market has shrunk dramatically in recent years and the gross margin in that market has dropped significantly. The latter fact forced Logitech to reconsider its development strategy and exit the OEM mouse business this year.
Logitech U96: Perhaps the most famous mouse in the world
“While the OEM business has been an important part of Logitech’s history, we see limited room for surplus sales going forward,” said Bracken Darrell, Logitech CEO, during a recent conference call with the company with investors and financial analysts. “Given our increased focus on growing sales in strategically important retail segments, we plan to exit the OEM business in the coming months.”.
In March of this year, at a meeting with investors, Logitech showed that all of its strategically important “retail” product categories (essentially everything the company sells in stores) has generated consistent sales growth over the years. New product categories (e.g. wireless speakers for smartphones) currently generate about 30% of revenue from retail channels. Thus, the growth in sales of new types of devices easily compensates for the lack of cheap OEM mice in the Logitech product list.
Notably, although Logitech has its own manufacturing facilities, they have hardly been used to make OEM mice, which account for about 6% of the company’s total revenue to date. Given the fact that Logitech’s low-cost OEM mice were hardly any different from other companies’ low-cost OEM mice, it’s unlikely that anyone would miss their absence on the market.
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While Logitech could sell its OEM mouse design and supply business, or simply license its trademark and technology to another company, Logitech decided not to.
“We’re going to stop selling OEM mice, most of which we didn’t make,” said Vincent Pilette, Chief Financial Officer of Logitech. “This business has a very low gross profit, it is difficult to imagine that we can sell it for any impressive amount. Thus, I would not hope for a large sum if you are thinking about the possibility of selling this business. “.
While Logitech will stop selling cheap OEM mice, premium PC makers will continue to bundle their systems with Logitech’s advanced retail mouse.
Logitech’s position in the US market
Logitech is currently the world’s largest supplier of mice. The company is also a market leader in keyboards, speakers, headphones, webcams and many other product categories in the United States and several other countries.