Logitech Is Using R&D to Expand Its Strong Consumer Brand into Business Markets
December 11, 2012 Leave a comment
- The BYOD phenomenon has resulted in a variety of consumer devices and services becoming standard components of business IT solutions in the SMB and enterprise marketplaces.
- Consumer product developers now have an opportunity to broaden product market scope and expand revenues by evolving their offerings into business solutions through strong R&D and marketing efforts.
A few days ago, I was invited to attend a lab tour at Logitech, a market leader in the consumer web camera market, headquartered in Newark, California. I refer to Logitech as a market leader because it holds an indisputable leading position in the consumer webcam market (reported to be around 70%). You might wonder why an analyst following the enterprise unified communications business would be invited to Logitech. Well, approximately two years ago, Logitech set up its Enterprise Division and began developing high-quality video cameras aimed at capturing the attention of IT decision makers interested in delivering video collaboration applications to their employees. The initial result was a personal videoconferencing camera named the BCC 950 ConferenceCam. The BCC 950 is a desktop or small group videoconference camera that plugs into a PC or laptop via a USB port. This simple-to-use device, introduced to the marketplace earlier this year, includes features expected in a video conferencing terminal used in a small conference room or business office, including 1080p30 resolution, noise cancellation, and pan-zoom-tilt functionality, and it has the plug-and-play ease-of-use capabilities of a consumer product. The product also has a very impressive list price at $250. There is no software installation required, and it offers out-of-the-box integration with Microsoft Lync, Cisco Jabber, Skype, Google+ Hangouts, and several other consumer videoconferencing services that are migrating into the enterprise office environment.
The specific purpose of the tour was to familiarize the handful of analysts and press reporters attending with the R&D methodology used to develop the new Logitech products aimed at the SMB/enterprise business-to-business market and IT executives. I have to admit that my assumption going in was that Logitech, like many other vendors, selected ‘best-of-breed’ sub components, had them assembled by offshore contractors, and sold them as its own products. However, I was surprised to discover during my tours of the 3D prototyping, optical design, test development engineering/manufacturing, image quality measurement, and audio labs that, for the most part, Logitech designs its high-quality products and components from scratch. Then, it builds them in a Logitech-owned factory in Shanghai, China. For example, the lenses used in Logitech business products are designed by Logitech R&D and crafted internally to capture the optimal level of light in the business environment. They are tested repeatedly and modified until they incorporate the best balance between the competing aspects of low light and sharpness. Logitech also goes through a lengthy color assessment process to ensure the lenses are able to match skin tones that can vary from region-to-region around the world to improve the reality of the video transmissions. The company believes this homegrown approach to R&D and manufacturing distinguishes it from the competition.
Many believe the primary future benefit of videoconferencing will come in the form of cost savings realized by reduced employee travel. Logitech’s principal belief is that the key benefit will be in the improvement of business processes and time savings achieved by reasonably priced, plug-and-play video collaboration tools upon which employees will grow to depend in order to drive efficiency in collaborating with colleagues, partners, and customers. It is an interesting approach to innovation which it is backing up with a unique slant to product development and manufacturing. Of course, without a portfolio of business-specific products, Logitech is likely to remain a niche player for SMB and enterprise communications solutions. Although Logitech hints at plans for expanding in this space, we will have to track the company’s progress in delivering on those plans.