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A Mouse Maker Stakes Its Future on TV Sets


Logitech has teamed up with Google and Intel on Web TV

(Changes second paragraph to make clear Logitech did not consider dropping computer mice and other peripheral equipment.)

Gerald Quindlen, chief executive officer of Logitech International (LOGI), looked around in early 2009 and saw that the Swiss maker of keyboards and mice faced a grim future. Sales of desktop PCs were falling as smartphones, tablets, and other mobile devices captured consumers' fancy. Most of those products don't require the computer peripherals that make up 89 percent of Logitech's sales.

After giving thought to adding digital accesories such as iPad cases, the American-born CEO decided to team up with Intel (INTC) and Google (GOOG) on a $300 book-size black box called Revue. The gadget, set to debut in October, will be the first product to use Google's software for flowing content off the Web onto a regular TV set. With Revue, Logitech aims to succeed where others have stumbled in delivering a device that can make it easy for even Luddites to master the complex tangle of home electronics. "People want to put you in a box and say, 'You're just a mouse maker,' " says Quindlen. "We want to prove we can be much more than that."

Based on the Android operating system, Google's Chrome Web browser, and Intel chips, Revue will allow consumers to perform more than one function on a single screen. Users, for instance, will be able to watch a football game while Googling stats on a particular player in a separate window. They'll also be able to download and run some Android apps on their big-screen sets.

Google and Intel chose Logitech because it makes a universal remote control, called Harmony, that contains codes for hundreds of home electronics, including TiVo (TIVO), Blu-ray disc players, and stereo receivers. From the comfort of their couches, people also will be able to launch video chats using software called Logitech Vid and an add-on high-definition webcam.

After more than a decade, Microsoft and Sony are still struggling to make it simple for consumers to set up and share movies, music, and pictures across devices, particularly televisions. Sony (SNE) and Microsoft (MSFT) have carved out a niche with their video-game consoles, but the majority of people don't think of these machines as entertainment hubs. The first iteration of Apple TV, a box that downloads movies and TV shows, didn't get much traction. And while unveiling a version of the gizmo on Sept. 1, Apple (AAPL) CEO Steve Jobs admitted that no one has quite figured out a new way of delivering a satisfying consumer experience in the living room. One big issue that has bedeviled all these players is getting Hollywood studios and other production houses to share their content, so that consumers will be willing to spend for a separate set-top box.

According to Bloomberg data, 14 of 22 analysts covering Logitech recommend investors hold or sell their shares. While Logitech "certainly will benefit from a window of exclusivity as the first companion box offered, recent reports suggest Google is encountering resistance from the studios with respect to making their content available," says Tony Berkman, head of the consumer technology practice for New York-based Majestic Research. A Google spokeswoman says the company is making progress on this front.

Even if Revue isn't a big success, Quindlen thinks Logitech could capture millions in revenue from licensing its Harmony remote and Vid software to others. Sales of add-on cameras and keyboards to surf the Web also could help Logitech hit its goal of $5 billion in sales in a few years, up from $2.2 billion in its fiscal 2009.

Logitech is also hoping to capitalize on the use of videoconferencing in the office through its purchase last year of Texas-based LifeSize. Quindlen is not saying it's going to be easy. "We have a lot of competitors and there will be a lot more," he says. "We have a lot more things to work on over the next few years to get to that $5 billion."

The bottom line: Logitech is trying to wean itself from PCs. Yet success in the Web TV arena has eluded even deeper-pocketed tech companies.

Edwards is a correspondent in Bloomberg Businessweek's San Francisco bureau.

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