In recent years, Logitech has gone from being one of Silicon Valley's quiet success stories to a company that looked like the world was passing it by.
Long known for its keyboards, mice and other computer peripherals, Logitech is on the front lines of the transition from PCs to tablets and smartphones. As the market for PCs has started to shrink, so, too, have those for peripherals.
Logitech's overall sales have dropped for the past two years; in its past fiscal year, the company posted a $225 million loss. The company, which is incorporated in Switzerland but has its headquarters in Newark, responded by ousting its chief executive and undergoing two rounds of layoffs.
Bracken Darrell, who Logitech named as its CEO in January, is the point man in the company's turnaround effort. Since coming on board in April 2012 as Logitech's president, Darrell has moved to streamline both Logitech's management ranks and its product lines.
Darrell spoke with this newspaper recently about how he's transforming Logitech and what he sees as the company's biggest opportunities in the future. This is an edited version of the interview.
Q How are you changing Logitech? And what do you see as the company's biggest opportunity going forward?
A When I took over, we made a clear decision to get out of some things. We're exiting the surveillance camera business. We're exiting a bunch of other legacy businesses within it.
And we're staying in, really, three businesses: PC peripherals, which is big and profitable and, as you know, there's growth pockets. We're going very aggressively after mobility -- that's the single biggest opportunity we have because of the growth rate of the category and our position now, which is a relatively modest share so far. And then the video conferencing.
Q How did you choose which businesses you were going to keep and which ones you were going to sell off?
A I'd love to make it sound like it was really harder than it was, but first we looked at where we make money and where we don't, and second, we looked at where's the future of the consumer going to be. And it's pretty clear that mobility's the place, and we need to be the Logitech of mobility, and not just the Logitech of PC peripherals. So it was about that simple.
Q Given that the PC market is shrinking, why stay in the PC peripheral business?
A Couple reasons. One is it's still a very big business, and it's not shrinking across the board. There are areas that are in a secular decline, like a Webcam for retail. But things like a keyboard? We're not sure that that's going to decline long-term. It may be at least stable to slight growth.
The conventional mouse business is probably going to change, but this concept of navigation in some way, shape or form will always be out there, whether it's a conventional mouse, a touch product, eye tracking, air gesture -- something out there will be there.
If you look around your newsroom, there are a lot of people on some kind of stationary device that needs some support for navigation and input. So that's a space we certainly plan to be in. It's a big part of our business today. It's a very profitable part of our business today, and we'll always be there. But it builds a capability that's very easy to move into mobility.
I think there are two ways to look at our company. One is to say, "Oh, the PC platform is kind of in a decline. Isn't that a problem?" The other way of looking at it is the growth in personal computing devices over the last two years has been the highest ever, by far, even if you exclude smartphones and just look at tablets. So we just need to be in that game.
Q It sounds like, when you came on board, you felt Logitech was spread too thin.
A Yeah. And it's easy to say, when you're the new person coming in. But we had a long, more than 20-year run of growth of the PC platform. And that was the wind at our back that enabled us to plant some seeds out in other places.
I think as we've gone through the last couple years, where the PC platform got stable and then started to decline, we really had to ask ourselves, "Are those seeds really worth cultivating?"
Q And some were, and some weren't.
A Yeah. I'm a marketing guy and a product guy, so I believe we can make a great business out of virtually any of them. It's just a question of where do you want to focus.
Q Within mobility, specifically, what do you see as the biggest opportunities there? Is it smartphones or tablets, or particular niches within those?
A Today, I would say it's tablets. Today, the attach rate for a keyboard with a tablet is about 8 percent to 10 percent and growing. If you really could unlock the unspoken desire of the consumer, it probably ought to be 25 or 30 percent. Especially as the cost of a keyboard relative to the cost of just a regular cover gets closer and closer and the thickness of a keyboard gets thinner and thinner, why wouldn't you take a keyboard with it?
So we think that's a big space, but we're looking at everything around a tablet, so we're not going to stop there.
Birthplace: Newton, N.J.
Position: President and CEO, Logitech
Previous jobs: President, Europe, Middle East and Africa division, Whirlpool; president, Braud subsidiary of Procter & Gamble; management positions with GE, P&G and PepsiCo.
Education: M.B.A., Harvard Business School; B.A. in English, C.P.A., Hendrix College
Family: Married, with two sons and a daughter
Residence: Palo Alto
Other interests: Triathlons, basketball, education, art and design
Five Things about Bracken Darrell
1. Before joining Logitech, he lived in Germany and Switzerland for eight years.
2. He grew up in Kentucky, then went to college in Arkansas.
3. After being greatly influenced by Daniel Kahneman's book, "Thinking Fast and Slow," he recommends it widely.
4. Next month, he plans to swim 2,500 meters across Lake Lugano, which is on the border of Switzerland and Italy.
5. He plays pickup basketball every week at a community center in Palo Alto.
Source: Logitech, Bracken Darrell