A trimester at a business school would teach you to analyse Hamel and Prahalad's monumental work on Core Competence. If Honda's core competence is its engines, Sony's is its ability to miniaturise electronics. Casually applying a similar logic to Logitech's world isn't as easy. Logitech is into Web cameras, keyboards, the computer mouse, to name a few of its products.
eWorld met up with Junien Labrousse, Executive Vice-President for Products and President, Europe, who helped us connect the dots. Read on to find out what he thinks is Logitech's core competence and where else it wants to be in the next half-a-decade:
Part of my role is to identify the main markets we want to go after. For the big part of the history of Logitech, up to the year 2000, we went after the mouse market. In the 2000-2009 period, we diversified around the PC. We mostly stayed around the PC, but went beyond to keyboards, webcams, PC speakers, headsets and the like.
The third stage of our journey is really about multiple platforms. We are looking at platforms in terms of Screens. So, there is the PC screen, which we know very well. Then there is the Living room screen — the TV. Third is the meeting room screen, which revolves around video conferencing and the like. (Logitech is into devices that control these screens rather than the screens themselves.)
We are looking at these three screens. We include the Tablet and the smart-phone screens in the PC category. They are somewhat different from the PC but we put them in the same area because the user expectation is similar, in terms of productivity.
My role is to make sure that we serve all these categories in the way we can match all our assets - technology, distribution, manufacturing and so on. We have enough investments in the new categories, yet we still have a lot of investments in the traditional category that are today paying the bills. It's a balancing act between the new, high-growth potential and the more matured ones.
How do you choose a product to invest in? Given your product range, it would perplex a layman trying to define your core competence — webcams, keyboards, mouse…How do you connect the dots?
Our core competency is the understanding of user interface in Technology. We do this best — collect all the consumer insights and understand their aspirations.
We've done it around the PC very well. And, now we are transferring this experience and knowledge, these very unique skills we have, to other platforms. How do we simplify lives? How do we make sure that things that look very complex can be made very easy? How do you make sure that anybody in the home can use technology in a way it is meant to be? How do we make sure that we let people immerse in their digital world without feeling that there is a barrier.
Second, is our brand. How do we make sure that if we pick a new industry market, it adds to our brand value? Third is our distribution expertise. Our products will have to reach a mass market using our global channels effectively. There is obviously a lot of technology around the Internet; wireless technology is also very wide-ranging, be it Bluetooth or Wi-Fi that we use on keyboard. Our own wireless technology allows us to pick the best performance for the best cost that the consumer wants.
We know a lot about buttons, and, don't you think it is easy - buttons, cables, small displays…Software is a big part of this. One of the reasons we are in Chennai is that software is a big, growing part of our product offering. Not only software application, but also services. In the living room there may be three remote control devices you use – for the TV, the set top box and the DVD player. We combine these into one for you as well as cater to the servicing of these devices as well.
So, every time you push a button, all codes are sent over automatically. Once you buy your remote, you tell us the make of the TV, the DVD and the set top box. We will program the remote control for your system, and that is it. It requires web service, requires help management, and this is the type of thing that Logitech, the mouse company has not been historically doing, but we are doing that more and more.
We do web services for handling remote controls; we have our own video calling software with our webcams. We have video security cameras that we sell in the US and France, but we are hoping to expand to other countries as well. You install that in your home, using electrical outlets to plug into. You can then view what is happening in your home from any smartphone.
How do you bet on a product to ride with? Your Google TV alliance sounds good because of the brand. But initial feedback is that the TV hasn't really taken off. Even if it takes off later, what gives you the confidence for a certain product?
We look at this differently. We thrived on the PC, because there was one platform that was standard, very stable and that works. If you look at the living room, there are a lot of different pieces - there is the TV, DVD, Cable Box and what else. With no set standard of management. Google TV's platform is standard, that could match all the contents together, whether it was the TV or the Internet or content on server, everything was managed by one single search engine. Google started to talk to us and so all these interfaces – keyboard, navigation stuff and then the video calling on the TV…there was incredible fit of skills and capabilities. They want to live up to standard platform; we have it to make the user experience so much better. Every time Apple or Google starts to talk about something, you have huge articles in press, huge expectations and to be able to respond to that is very difficult.
We (as an industry) tend to always over-estimate the short term and under-estimate the long term. On Google TV there was no question to me - the momentum was there, it is going nicely, the customers using Google TV are actually pretty happy. In the beginning, everybody was buying it to see how it was but then they realised Google TV is not everyone, it was actually for those who were comfortable with technology, who really want to discover new content everywhere. It is different from an Apple TV experience, which is very limited, but very well packaged.
Google TV is more complex and gives you a wealth of content you cannot find elsewhere.
The people understand that, now they buy Google TV and they are happy. They feel it is a good experience. The one thing still missing there is what is called “market Place” which is the availability of Apps on Google TV, which Google announced is going to come in the next few months.
We are feeling pretty good about this. Answering your question, yes, with Google there was a little bit of doubt, but it is going well. You cannot ignore the strength of Google as a brand in the market. But it was much more about the fit of skills.
In screens, how would your expertise come into play?
In the conference room, first comes the video aspect; video is getting a lot of momentum. The world is becoming more global, yet we have to be very cost-conscious and control travel costs. We use video communication a lot of the time. I, personally use video communication for four hours a day.
So, for us to actually migrate our webcam capabilities in the consumer world to the enterprise segment like Lifesize, a company we acquired, is natural progression. Webcams sell today between $10 and $99 roughly, so that is one space from where you can do Skype; on the enterprise you have the store that sells products costing $2,500 and more. In between, in the $100-1,000 range, there is nothing. We will have a huge advantage in the market.
But what is triggering this? In the last 20-30 years of the PC business being active, this gap has not been filled. Probably because there has been no demand, or cost competitiveness is not possible at that scale?
Cost has always been the factor, for, these kinds of devices used to cost $20,000-50,000, and right now you can find solutions at $2,500. We believe it is possible to go down, in the meanwhile, technology has a role to deliver on PCs with a $20 webcam. You can log to Skype, it's not great, but it is a way to work and that is fine. Inexpensive technology brings to you some performance, and performance goes up with pricing.
How do you play in the Tablet market?
That's a great market. The forecast for tablets is increasing all the time. So, we first thought it would be a nice sizeable market, now it's a big market. The plan is that the Tablets will this year represent 20 per cent of the PC market. Maybe it is a US number, from Gartner. So, it is a pretty sizeable market.
Why do people buy Tablets?
This new compact is developing new user cases. We need to get consumer insight to really extract from users what is the real expectation and aspiration. That is the tricky part. When you ask them why they bought, most people say “it is a pretty cool device, because it is Apple, my neighbour has one, and because I heard about it,” or worse, “if you don't have one you are stupid.” These are reasons people give. You don't really type pages of email. There must be something people love about it. It is even more interesting when they buy the second one, because now they know what it is, and when they buy their next tablet, they still can't articulate why. This is where the magic is.
The Tablet is something that is very different from the PC. The PC is imperfect and requires constant improvement of interface. The mouse you get with the PC may be sub-functional, the keyboard may be ugly. In a notebook, the OS is horrible and it takes an incredible amount of time to boot. The Tablet is actually much better. Not great yet, you can still watch a movie on it. It is not fantastic, but it is ok. It is instant ON, always ON, so you don't have to wait for the machine to boot. You have complete access to the web, its good stuff. So, we are not going to try to fix the tablet.
The Tablet is more or less perfect. What we are doing is to make you use the tablet in other places. You need a speaker in your kitchen. So, when you have the tablet in the kitchen, you will be able to play your iTunes directly on the speakers, without wires. Sometimes you need to type on the Tablet, so you need a keyboard on your desk. You need maybe a charger in your bedroom, once you are done reading the news, you can plug it in and leave it be. In the living room you should be able to navigate through all your Net content or TV content through this. When you want speakers in your kitchen, it is through Bluetooth technology, stuff that we know how to do.
How come you are not into the mobile space yet?
Smartphones, phones, these are very difficult segments. We do iPod and iPhone speakers, docks. We also do earphones with the company we acquired, called Ultimate Ears. We still have not taken the whole benefit of the acquisition, but we have some systems for smartphones. For the rest, it's actually very difficult to accessories the Smartphone because it is something you take in your pocket, for which you don't need anything else. I have a group looking at that for a while; we are finding some ideas which are very different (to execute). No company has really had sustained success in this segment.
If you can do webcams, why not make cameras that are embedded in smartphones? If Flextronics can do it, why can't you?
(Labrousse differentiates between ingredients in a smart phone and accessories to it.) Ingredients in Smartphones are an emerging business. This is a commodity, low-margin business. Nothing of serious interest for us, no leverage of the brand. Accessories are things that people like. We could do things but with the overall audio products we have, we have areas to try.
On your role as chief of technology.
Innovation and technology expertise are not the same. They are very different. Innovation comes from consumer insight, if you can really gather insight and bring a response, whether it is technology or marketing, it does not matter. For instance, three years ago, we launched the first colour collection among mice. So, instead of having a dark grey mouse, we have them in Blue, Red, and Orange and so on. We went from colours to patterns, we have designs. How you position the product has nothing to do with technology.
On the technology side we intend to focus on some technology that is used across the board. And some that are used very specifically. The one that is used across the board is Wireless, we need to make sure that any type of Wireless is standardised, be it network wireless such as Wi-Fi, or device wireless – Bluetooth – or even our own stuff, which is for speakers in the kitchen, keyboards, etc. Another important aspect for us is power management, because with wireless stuff, you don't want to spend time recharging stuff. For example, we launched a solar keyboard a few months ago. So, you don't have to recharge or change batteries. Just the light you get, even in a dark room is enough to charge the keyboard for normal use.
More important for us and more forward-looking is software interaction. We have a lot of activities on simplifying user interface. How many clicks do you need to get to where you want to go? What is the process you will need to go to this sub menu, to this activity? It is all about trying to use the number of interactions, yet and that is very important - making sure that your drive from intention to result is very linear. You don't get doubts such as, ‘what did I do to get there?'; it has to be very self explanatory, very comfortable. This type of things sounds very easy, but requires constant effort to work.
Software technologies are very important, whether it is iOS for Apple products or Android we need to have these kinds of updates. This is the purpose of our visit to Chennai; we are going to do these activities very well.
We also have to do our work within a framework of cost control and that's one of the reasons we are in Chennai. We are going to grow Chennai as much as possible — because we can aim for a much higher level of productivity here than we might have in some other parts of the world, especially the western world. We started here two years ago. Now, we have 60 full-time and 80 contractual employees. And we plan to grow this 60 to about 200 in the range of 12-24 months. This will become the top development centre for Logitech. That is part of what I do, which is to see if we can build these domains of knowledge, skills and capabilities, and we can create a site with the right level of motivation and ownership of programs and that is the tricky part. This is why I am here, to understand better, to see what is working, what is not working, how do we talk to my managers in America & Europe and tell them “you have to keep investing here”
So what kind of work do they do, when you say Android?
On Android, it is for two things: one, for Google TV but also for Smartphones and Android Tablets. There are a lot of things here. Using video security cameras to monitor your home on your Android Smartphone, you need an Android application. Android, iOS, web services, user interface, embedded software, applications all these and hardware activities are becoming more and more important for our products.