Today, I’m talking with Hanneke Faber, the CEO of Logitech. Hanneke’s inactive beautiful fresh to the role: she joined the company last October, after the erstwhile CEO, Bracken Darrell, left.
You might remember Bracken — he was on Decoder back in 2021, fundamentally at the tallness of the covid-19 pandemic-era boom in home office sales, erstwhile Logitech was selling mice, keyboards, and webcams as fast as it could make them.
Obviously, things have changed since then. Logitech, like so many companies that saw immense pandemic booms, very abruptly saw that growth slow down erstwhile the planet began to normalize. Bracken left Logitech last June to go to the company that owns Vans and Supreme, and Logitech brought on Hanneke, a longtime executive with an extended background in consumer goods at conglomerates like Unilever and Procter & Gamble.
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Hanneke and I talked about the structural changes she’s already making at Logitech and the changes she intends to make in the future. It sounds like any Logitech products, like its smart home doorbells and cameras, are not long for this world.
Hanneke says that people frequently say “the mouse built this house” inside Logitech, which is simply a delightful catchphrase I’d never heard before. From there, we talked about how fresh interface paradigms like voice and AI might upend mice and keyboards and how she’s reasoning about the company’s long-term future in a planet where conventional PC sales might go down.
Of course, we talked about whether anyone wants their mouse to be anything more than a mouse — Logitech is adding AI features and even AI buttons to any of its products, and I wanted to know if that’s working.
You’ll hear Hanneke talk about a concept called the “forever mouse,” or a mouse you buy erstwhile and upgrade over time with fresh software features — features that, of course, might carry a subscription fee. Subscription mice! It’s a lot.
You’ll besides hear Hanneke talk about how she plans to grow the business and hit an ambitious carbon footprint simplification milestone by the end of the decade as well as where she thinks the company needs to go next. There’s a lot in this one.
Okay, Logitech CEO Hanneke Faber. Here we go.
This transcript has been lightly edited for dimension and clarity.
Hanneke Faber, you are the new-ish CEO of Logitech. Welcome to Decoder.
I am truly excited to talk to you. You have been on the occupation as CEO for 7 months now?
Seven months. I started on December 1st.
So you’re in. You’re settled. You know where the bathrooms are, which is step one.
Yeah, for sure. Although today’s my first day actually in the office in California. I’ve been in Switzerland so far, so you catch me on day one.
Well, I’m just going to ask you where different things are in that office for the remainder of the hour.
Logitech is simply a fascinating company. It’s 1 of those companies that I think is undercover. erstwhile we started Decoder, 1 of our first ideas was that we should talk to more than 5 CEOs, and Logitech is 1 of those companies that is just ever-present in the planet of technology. It is simply a partner to the large companies. It’s in everyone’s office. It’s in lots of people’s homes. It’s fundamentally a core fixture of gaming. You play in quite a few spaces.
I talked to your predecessor, Bracken Darrell, in the mediate of the covid-19 pandemic in 2021, erstwhile everything was a lot different. Sales were skyrocketing, and he changed his strategy a small bit. Bracken late left. He now runs ultimate and Vans, which was a shift. We’ll talk to him about that. You have a background in consumer goods at Procter & Gamble and Unilever. Why jump to Logitech erstwhile the occupation opened up?
Actually, Bracken came from P&G as well, so that’s not so different. But I’ve been truly fortunate throughout my career of working in different industries. I worked mostly in beauty at P&G. I actually worked in tech for 4 years at Ahold Delhaize. I ran their e-commerce business erstwhile it was almost nonexistent. We built a truly cool online grocery business. And then, for the last six years, I ran Unilever’s global food business.
So [despite being] different businesses, I think there are any themes that apply to Logitech: a focus on the user and the consumer first; a focus on innovation and product. And then, finally, truly global footprints in all occupation I’ve worked in and a mix of B2B and B2C. All of those things do translate. Of course, this is simply a fresh manufacture and a fresh company for me, but it’s large to bring a full bunch of things that I have experience with and learn a fewer fresh things as well.
One of the things that’s truly interesting to me about Logitech is that people tend to think of its core products — mice, keyboards, headsets, webcams — as commodities, but they’re inactive technology products. There’s quite a few innovation left in those spaces. Logitech has driven any of that innovation, but then you see another weird things blossom into cultures unto themselves — mechanical keyboards, for example. There are webcam startups again, which is truly interesting. That was not a thing that was happening pre-covid.
Do you view the chance here as an operational opportunity, as an innovation opportunity, as a “find fresh categories and make them grow” opportunity? What is your macro view of the situation?
There are 3 main tailwinds on our core business. The first 1 is fresh ways of working, hybrid working. That’s good for our individual workspace business, the conventional mice and keyboards, due to the fact that everyone needs multiple setups. And evidently it’s good for our video conferencing business. So the fresh ways of working post-covid are a real tailwind for us.
Second is gaming. Gaming, just as a space, continues to grow, and especially with fresh demographics. Almost half of gamers are now women, which is amazing. And older people game. It’s no longer just teenage boys. We see the marketplace proceed to grow.
Wait, can I ask you 1 question about older people in that context?
Yeah. Sorry, older than teenage boys?
Sure. Is it that a set of teenage boys who were gamers 15 years ago got older, or is it older people are becoming fresh gamers?
I think we’re seeing a small bit of both, although it’s most likely the first trend that is the biggest one. The teenage boys of 15 years ago are now in their 30s and 40s, so that just extends the demographic. fresh teenage boys are inactive coming in, and girls, so that’s good. But we’re besides seeing older cohorts coming in mostly through mobile, through Candy Crush but besides Wordle and Connections. Those are entry points into gaming that make them more comfortable with gaming and may take them to PC and console gaming as well.
You said there was a 3rd thing. What was the 3rd thing?
The 3rd thing… of course you can’t do an interview for 3 minutes and not say AI, but AI is simply a real tailwind for us as well.
How do you think AI is simply a tailwind for Logitech in particular?
In 3 ways. First, like for any another company, is interior productivity. We’re seeing it on the software engineering side, where coding and investigating have clearly become more efficient, but we’re besides seeing it on the creative and brand-building side, again, where things are getting more efficient but besides sometimes more creative.
More importantly, on the product side, there are 2 ways in which AI will be a tailwind. First of all, we’ve always been a human-to-technology interface company, and we’re starting to be an interface to the large language models. A couple of months ago, we launched the Logi AI Prompt Builder, which is fundamentally a shortcut in our software to ChatGPT. It has millions of unique users already, and it’s just a simpler way for people to usage ChatGPT and not get out of their flow erstwhile they usage all of our mice and keyboards in English-speaking countries. There will be much more to follow in terms of being that human-technology interface.
There’s a 3rd area that is large on AI, which is in audio and video. We have a large video conferencing business, a headphones business. That’s truly device learning and large data models, and the company’s been at those for a number of years, but we’re seeing the quality of things like two-way sound cancellation or video conferencing equipment that actually knows erstwhile to zoom in on you erstwhile you’re speaking and not erstwhile you’re beginning a packet of crisps. Those kinds of things are truly important, and I foresee massive quality improvements thanks to device learning in the years ahead.
I want to come back to the AI question due to the fact that I think there’s a lot to unpack there, and there are quite a few apparent opportunities, like you said, in audio and video. And then there are any opportunities that, I think, deserve a small more time around AI prompt building and that kind of thing.
But I want to stay focused for a second on you. You’re the fresh CEO. So covid, work from home, created a massive chance for Logitech. I bought a black marketplace webcam at the end of 2020. It was Chinese. It wasn’t even meant for this market.
The erstwhile administration truly ramped production. They saw immense growth. Then there was an enterprise push as more and more companies embraced hybrid and distant and refitted all their conference rooms. That all crashed back to earth, and there were a couple of years erstwhile the growth was falling. Logitech’s 4th fourth earnings released back in April marked your first 4th of sales growth in over 2 years. You besides reported growth in your most fresh quarter. What is bringing that growth back?
Product innovation and markets that are stabilizing a small bit post-covid [are contributing to that growth]. I gotta say, this company should be very arrogant of what it did during covid under Bracken. It did a truly large job, but evidently it was a bit of a sugar high. That said, the company is 50 percent bigger present than it was pre-covid, so it hasn’t all come crashing down to earth.
I think what we’ve done is we’ve truly been focusing on large execution and on things that we can control. There are any things that we can’t control: inflation, consumer confidence, corporate IT budgets for our video conferencing business. But within those constraints, we’ve been increasing our share. That was 1 of the drivers of us getting back to growth in Q4. We’ve been delivering truly breathtaking innovation, and we’ll proceed to do those things.
You called it a sugar high. I feel like the broad communicative of tech in peculiar is the sugar advanced of overinvestment during covid, of competing to hire all single individual that existed in the planet who could compose code and then assuming that those trends would be permanent and we would all stay inside and live our lives mediated through screens on the net forever. Many companies did not last that sugar high. Is it that simple, that Logitech just weathered the covid highs and the trends and is back to a unchangeable place now?
We’re not back to where we were in 2019. Again, we’re 50 percent bigger as a company, and the way people work is so different present versus 2019. Virtually all company that I talk to, and I talk to many of them due to the fact that they’re all our customers, wants to be hybrid. They want their people to come into the office 2 or 3 days a week, but they besides want to offer the flexibility of working from home or working from anywhere. That is evidently very different from in 2019. We pride ourselves on being a model for ways of working due to the fact that we sale this stuff, so I think we’re very well positioned to aid our corporate customers give people a large experience both in the office and at home.
You mentioned that you are in the California office today, and it’s your first day there. You moved to Switzerland erstwhile you got this job. How are you structuring your time between remote, hybrid, and in person? How’s that working for you?
Sadly, I live on an airplane, it feels like. Logitech is very peculiar in that it is simply a super global company. We’re on the ground in more than 100 countries, and we have large capabilities around the world. I spend most likely 60 percent of my time in offices that are not my own. erstwhile I’m in California, or I spent these first 7 months [on the job] in our Swiss office, I effort to be in the office. But I might also, if I start early — like today, I started at 6AM — go back home at 1PM and get any exercise and then work more later on. That’s a level of flexibility that I don’t think we necessarily had pre-covid, which is great.
Do you always find yourself in that horrible situation of being alone in a conference area on a video call?
That’s just ridiculous, right?
That’s my nightmare. If I go to the office and I’m the only 1 there and everyone else is on a video call, I wonder why we even have an office.
[Laughs] Yeah, absolutely. Well, we have this concept of gravity days at Logitech. On the gravity days, everyone’s there so you’re not by yourself.
What are the gravity days?
It depends on the teams. My gravity days here are Tuesdays and Wednesdays, so I’ll see most of the leadership team. But different teams have different gravity days that they choice themselves.
And then are you surviving on a plane just to be in individual wherever you request to be?
Yes, and part of that is due to the fact that I’m fresh — and I’m not just fresh to the company; I’m besides fresh to the industry. I request to meet people, our own people, but very much besides suppliers, customers, consumers, investors. There are just quite a few people to meet, and surely a first meeting, I think, is inactive best done in person.
This brings us very neatly to what I think of as the Decoder questions. I was listening to the first fireside chat you had for your investors 5 days into the job, and I heard you say that your kind is to be as close to the client and as close to the people doing the work as possible due to the fact that they know best. That’s you on planes. But ultimately, you gotta make quite a few decisions. What kind of decisions do you want to be making? What’s your framework for making them?
I think company strategy is simply a large way to set that decision framework. I’ve spent quite a few time in the last six months, first listening, then co-creating that strategy, and then setting the strategy and setting the bar high. If I unpack that a small bit, there’s lots of stuff I don’t know and that we all don’t know, so listening was first. Then we sat down with the leadership squad first to truly make choices. What’s our goal? For 2031, due to the fact that that’s erstwhile Logitech will be 50 years old, we set a goal of doubling the business and reducing our carbon footprint by 50 percent while retaining truly attractive margins.
We set a mission, which we’ve said is extending human possible in work and in play. We had a good mission, but it was 3 pages long, so I truly wanted to simplify that. And “extending human potential,” those words are carefully chosen. So “extending” is evidently a riff on the mouse. The mouse built this house. It extends your arm, so we want to extend—
You say, “The mouse built this house”?
Yeah, that’s what they say here — and I say it. I like it.
That should be the full mission, I got to be honest with you. I think it’s a strong contender.
That’s right. But we extend human possible in this age of AI, this age of [Zoom CEO] Eric Yuan saying there are digital twins of all of us coming to meetings. It’s truly crucial that we extend human possible due to the fact that we can make humans better. We can aid you win that game. We can aid you be more productive. We can aid you connect better erstwhile you’re in that conference area by yourself. If we can do that in ways that are besides healthier for people on the planet, then extending human possible is truly worth waking up for all morning.
And what else is there in life but work and play? We do that in work and play today, but I believe, with my leadership team, that those areas are actually much bigger than where Logitech plays today. Today, we’re mostly focused on work. We focus on office workers. Most people in the planet don’t work in an office. They work in retail, healthcare, education, construction, you name it. And we can play there, too. And in gaming, we’re mostly focused on PC gaming. Today, there’s a lot more play out there than just PC gaming. That broadens our TAM, our full addressable market, for the future, which is an chance to deliver that growth.
That’s a long-winded way of saying what we’re doing. That is our framework for decision-making. We’ve then made any beautiful clear choices where to play and how to win below that, and now that that is in place, as a leader, I can ellipse back and say, “Okay, I listened. We co-create it and we set the bar high.” Now, I ellipse back and I perceive again. I go back and I perceive to people and say, “What do they need? What obstacles do I request to take distant so that they can deliver on doubling the business and reducing the carbon footprint by half?”
What kind of obstacles have you removed so far?
Well, we’re in the process [of doing this]. I think any of those obstacles might be the consequence of that sugar high. We got a small complicated in our organization due to the fact that we had quite a few people, and that usually makes things a small more complicated. So we’re about to do any simplifications and besides invest any more money in areas where we’re possibly not rather as good as we request to be.
Historically, we’re a fantastic B2C company. We sale our stuff to Amazon, to Best Buy, to MediaMarkt. That’s who we are. B2B is much newer. And again, Bracken and the squad did a large occupation of building a B2B business from scratch with a truly disruptive video conferencing product. But we’re like teenagers in that space. I wouldn’t call us babies, but we’re like teenagers. If you compare our capabilities, especially on the go-to-market side, to any of the more legacy players in B2B, we’re just newer. That’s a place where we will be investing, and that’s been an obstacle.
You have brought up changing the org chart, which is bait for the show. That’s what Decoder is all about. erstwhile I talked to Bracken last, I will never forget it, he described 1 of the most complicated org charts I’ve always heard. It seemed to be working. He seemed to be happy with it. He told me, and I went and looked it up, he had 23 direct reports. Most of the teams across the company were set up to be almost completely independent, and he was totally fine with duplicated efforts and resources.
So if 2 teams were both going to do microphones, that was fine as long as they were both going to marketplace and the teams independently were profitable or successful in their own way. I think he told me there were something like 20 or 30 product teams just moving under the various brands. That feels like the thing you’re about to change. Is that what you’re changing?
Yeah, and again, I don’t want to blame erstwhile setups due to the fact that they were working for their time. The track evidence of value creation here at Logitech is fantastic. But I think now what I’m proceeding from our people and what we’re seeing in any of the results over the past fewer years is that we do request to simplify due to the fact that things have gotten a small bit besides complicated.
Part of that, by the way, is the brand story. Logitech tried to become a multi-brand company, but today, 97 percent of our sales are in the Logitech brand, Logitech and Logitech G, and I consider those 1 brand, really. So it’s crucial that we make certain that 97 percent of our resources are focused on that brand and that we don’t get besides scattered around the company. That’s 1 of the another strategical choices that we’ve made: we will build 1 fantastic iconic Logitech brand, and that’s our focus.
A lot of the another brands you’re describing are the consequence of acquisitions. There’s eventual Ears, Jaybird, Blue Microphones, Streamlabs — and the list goes on. There have been quite a few acquisitions and there are quite a few fresh products. Then there are attempts to be more consumer with the Logi brand. Is all of that stuff going to come in under Logitech, or are you going to leave those alone?
Well, again, it’s the tail wagging the dog, right? It’s very, very small. And any of it has already been folded in successfully under the Logitech brand. If you look at Astro, which was a truly good acquisition, it’s now part of Logitech. That makes quite a few sense. And it absolutely doesn’t mean we won’t do acquisitions in the future, but again, erstwhile they can be folded in, they most likely should.
There are much, much bigger companies with much bigger brands that don’t trust on a full unchangeable of brands. So I’m excited about that. And then you besides mentioned product improvement and engineering, which, of course, is the heart of this company. Again, there’s most likely area for a small bit more synergy, and this is, by the way, not about cost-cutting. It’s just about getting more out of the resources that we have if we talk to each another a small bit more.
I’m assuming you’re not going to stick with 23 direct reports and a bunch of fundamentally startup founders everywhere.
I already haven’t, that I know.
To your point, it worked.
I remember talking to Bracken. I was like, “That sounds beautiful fun,” and he seemed like he was having a good time. But you request to change it now. How are you doing that? What’s the structure now?
I’m already down to 12 or 13 direct reports, so it’s already streamlined in that way. I think moving the company along the lines of 3 large businesses — individual workspace, gaming, and Logitech for enterprise — is simply a truly crucial way of going forward, and that’s what we’ll be doing.
Again, historically, we’re very much a consumer company, so across [personal workspace solutions] and gaming, we’ll be focused on the end user to consumer, the customer, Amazon, Walmart, Gigabyte, MediaMarkt, etc. And B2B is simply a different kettle of fish where we inactive gotta build crucial capability, which is simply a immense chance because, again, we’ve got fabulous products for corporate customers, and our penetration is inactive very low. So I’m truly excited about the growth possible of our B2B business.
Inside of that structure, which feels like a go-to-market structure, you’ve got the 3 large consumer segments, and you’ve got products that might decision between them. You do inactive have any brands that people love. eventual Ears is simply a brand that I love. That was my first fancy pair of headphones. You have Blue Microphones, where half or a 4th of the podcasts in the planet are on fancy Blue Microphones, and they’re a fixture of all the studios. Are you going to leave any of those to their high-end customers?
Yeah, absolutely, and we hold a tiny eventual Ears squad who are doing large stuff. They just launched the fresh Wonderboom, which is simply a super cool product. The same is actual for Blue. Absolutely, those small teams, again, we’re super adequate and scrappy on those, but they’re large products and they’ll stay in place and they’re as loved as the large dogs.
When you were going through and saying, “Okay, I gotta fold any into the 3 large buckets and I’m going to leave any of these alone,” what was the framework you used? What was the marker for you to say, “Okay, we’re going to set Blue aside, but this 1 we gotta fold into the main consumer Logitech brand”?
I think the framework is simply a framework of growth. So if we want to double the business by 2031, then you work back and you say, “Okay, what do we request to do?” Well, we request to grow organically, mid-single digits, and we want to do any M&A. What are the spaces that we’ll play in? It will be work and play and it will be B2B and B2C. Then, erstwhile you look at the building blocks, the large chunks will be in B2B video conferencing and individual workspace products, in gaming and in PWS products.
So then, underneath that, yes, you gotta fit in any of these smaller pieces, and that’s totally fine. I’ve always found throughout my career that it’s actually fun to work on any of these smaller pieces due to the fact that you have a small more freedom. If you do well, people think you’re fantastic. If you don’t do well, it doesn’t truly matter. So that’s a good place to be in.
One of the another things you said in that investor call, which is besides just pure Decoder bait and I thank you for it, is that 1 of your core beliefs is that companies are perfectly designed to get the results that they are getting. Whatever consequence you get you can just run right back to the structure of the company. Explain that in more depth.
The results that we got last quarter, which we’re actually pleased with due to the fact that we were back to growth and we had truly good margins, are the consequence of the structure that we had then. Now, I’m a large believer that you gotta make a fewer changes if you want to get, in our case, even better results, a small faster growth with the same margins, and not unimportantly, reduce that carbon footprint by 50 percent. If you anticipate the same results, then it’s fine to stay with that same organization. If you anticipate results that are a small different, you request to make any tweaks. Again, I don’t think Logitech is simply a disaster turnaround communicative at all. This is simply a good-to-great story. But if we want to be great, then we gotta make any tweaks.
As you think about changing the structure, you talked about your process here tonight. You talked to everybody. You listened. You co-created any ideas. There are any goals here. You’re saying, “I’m designing a structure to get to any very explicit, most likely measurable goals.” Do those look mostly like growth? Does it look like product innovation? Does it look like flipping the apple cart over and inventing the next iPhone?
This is simply a product and innovation company at its heart. So that’s the way we grow, with great, fantastic products that our users love. But that’s the what and the how. In terms of the outcome, yes, it’s about growth. So we’ve said we want to double the business by 2031 and reduce our carbon footprint due to the fact that that’s something the company committed to well before I got here, which is not so easy to do erstwhile you double your business due to the fact that each 1 of those mice and keyboards emits more carbon. Then, of course, we want to make large value for investors. So gross margins and operating income margins are important, and we’ve guided for any truly attractive levels.
You’re the fresh CEO. You got hired by a board of directors. any of that board of directors is leaving. You’re going to have any fresh members that the shareholders can vote for. You’d like them to vote for you to be added to the board of directors.
When you set that goal and you say, “I’m changing the structure of the company,” or even erstwhile you’re interviewing for the job, did you come in and say, “Look, I think we should double the size of the company by 2031”? Was that the pitch? Was it, “I think there’s a fresh vision”? Now, erstwhile you’re actually executing and saying these things out loud, do you feel the force to grow from your investors or your board members? Where does that come from?
I would say, first of all, on the process to get this role, kudos to the board of Logitech. I thought they did a truly large occupation in the interviewing process, where, I’ll spill the beans, but they asked each of the candidates to do a 15- to 20-minute presentation on what they thought the company should be. Now, of course, as an external candidate, you do that not knowing a full lot.
So, while any of the themes I talked about have come back in my actual strategy, any of the things have changed due to the fact that evidently I know a lot more now than I did before I joined. But that was helpful due to the fact that it allows the board to see where the candidate wants to take the company. But you’d be amazed that not all boards do that.
So that was the hiring process. You didn’t walk in saying, “I’m going to double the size of the company.” But now is erstwhile you’re saying that?
And is that a decision that is coming from the board in service to its investors?
No. Again, this is listening, co-creating, and then engaging with the board profoundly on “does this make sense — these goals, this vision?” And then these “where to play” and “how to win” choices, do those make sense? The board was a truly crucial stakeholder, obviously, in finalizing that. But so were the people of Logitech. I’m a large believer in co-creation, and that’s not just co-creation with the leadership team.
We actually invited all 7,000 employees to come to co-creation sessions around the planet where we shared with them an MVP of our strategy. But then we said, “Tell us 3 things you’d like and 3 things you want to add or change.” We had large feedback on that, and that truly shaped the final strategy.
What was the biggest thing that you added or changed or the biggest thing that people truly liked?
What they truly liked is the continued focus on products and innovation. Again, that is our lifeblood, and we have so many fantastic engineers and designers, so that came out very, very clearly. I think what amazed me was actually the passion for sustainability. There’s a immense passion around the planet for what we can do to lead in tech on reducing the carbon footprint where there’s quite a few greenwashing and quite a few expanding carbon footprints, unfortunately, in the age of AI. There was more passion for that subject than I had expected. So again, it’s crucial in our strategy going forward.
Let’s talk about the products. They are the lifeblood of the company. I’m going to say “the mouse built this house” all the time. It’s very good. I can’t believe I never knew that before. It’s a beautiful sprawling product lineup. You’re in a million categories. How did you acquaint yourself with all of it?
There are 3 large ones.
Well, sure, but everything from smart home doorbells to mice to headphones, it’s quite a few things.
I think those are beautiful much gone.
So wait, you’re going to leave the smart home?
No, there’s our timing. I request to double-check, but I’m not even certain those are inactive being sold. It’s truly individual workspace, video conferencing, and gaming.
What about all the customers you sold smart home cameras to who have cloud service dependencies?
We’ll proceed to support, of course, what we’ve sold for any time.
I’m always curious due to the fact that all fresh category now has any kind of ongoing service dependency, which feels very risky. Our audience is constantly telling us that 1 reason they go back to large companies over and over again and won’t buy products from challengers or startups is that they don’t want their products to disappear. And then large companies like Google have broken that trust anyway. This is simply a truly ongoing conversation with The Verge audience. It must be fresh for you. erstwhile you were at Procter & Gamble, I’m assuming people didn’t buy shampoo and then worry you were going to halt selling shampoo.
That’s so true, and it’s specified an interesting topic. Actually, at Procter & Gamble, we did get lots of people calling erstwhile you took their lipstick shade out, but that’s a small different. There’s no software inside.
Yeah, you weren’t breaking all the existing lipsticks that had been sold.
Exactly. Again, this is simply a space that’s somewhat newer for Logitech, but it’s incredibly strategic. We don’t do just pure hardware. We do design-led, software-enabled hardware, and that software component in the age of AI is more crucial all day. The services that we supply to our corporate customers are actually a nicely increasing part of the business that didn’t be a fewer years ago due to the fact that Logitech was fresh to B2B and wasn’t charging for its services. Now we are.
I think we deliver large software services to our B2B customers, but we are learning. On the consumer side as well, through Logitech Options Plus, the software, it’s very crucial to deliver superior products for our users. We now have more software engineers than hardware engineers, which is simply a large milestone.
This comes up in amazing ways on Decoder. The CTO of John Deere once told me that John Deere has more software engineers than hardware engineers due to the fact that it has to support the ongoing service and cloud capabilities of the tractor. This makes a small more sense for Logitech, but truly what we’re talking about is an ongoing cost. You sale me the keyboard once. It’s got Options Plus. It has an AI button. I push the button, and individual has to make certain the software inactive works. individual most likely has to pay ChatGPT for access to the service. Where is that going to come from? Are you baking that into the margin of the keyboard or the mouse?
Absolutely. We’re baking that in, and I’m not peculiarly worried about that. What I’m actually hoping is that this will contribute to the longevity of our products, that we’ll have more premium products but products that last longer due to the fact that they’re superior and due to the fact that we can proceed to update them over time. And again, I talked about doubling the business and reducing the carbon footprint by half. The longevity part is truly important.
I’m very intrigued. The another day, in Ireland, in our innovation center there, 1 of our squad members showed me a forever mouse with the comparison to a watch. This is simply a good watch, not a super costly watch, but I’m not planning to throw that watch distant ever. So why would I be throwing my mouse or my keyboard distant if it’s a fantastic-quality, well-designed, software-enabled mouse. The forever mouse is 1 of the things that we’d like to get to.
What made the mouse a forever mouse?
It was a small heavier, it had large software and services that you’d constantly update, and it was beautiful. So I don’t think we’re necessarily super far distant from that.
But, again, I just come back to the cost. You sale me the mouse once. possibly I’ll pay 200 bucks for it.
The business model evidently is the challenge there. So then software is even more crucial erstwhile you think about it. Can you come up with a service model? In our video conferencing business, that is now a very crucial part of the model, the services, and it’s critical for corporate customers.
Let’s come to that in a second due to the fact that that makes sense to me. You sale managed services to enterprises. You price support contracts for cameras and whatever. That’s an ongoing request businesses have. I’m inactive stuck on, “You’re going to sale me a mouse erstwhile and it’s going to have ongoing software updates forever.”
Imagine it’s like your Rolex. You’re going to truly love that.
But Rolex has to employment software engineers to ship me over-the-air updates forever.
But the artifact is like your Rolex, and then given that we know the technology that we attach to changes, it’s not going to be like your Rolex in that it doesn’t gotta always change. Our stuff will gotta change, but does the hardware gotta change? I’m not so sure. We’ll gotta evidently fix it and figure out what that business model is. We’re not at the forever mouse today, but I’m intrigued by the thought.
It surely will aid with sustainability. There are 2 ways people have traditionally proposed monetizing hardware over time. It’s subscription fees and it’s advertising. Is there a 3rd way that I don’t know about that you’re reasoning of?
No. The 3rd way is the conventional model of “we innovate and we have you upgrade.” That’s the current model. And we’re beautiful damn good at that model due to the fact that we have beautiful damn good innovators around the company who do come up with fabulous products.
That is definitely the model today. It’s not a bad model at all, especially since we’re continuing to plan for more sustainable products. We’re continuing to recycle and refurbish products. All of that is good. But that said, I am intrigued by a forever mouse or forever video conferencing solution that you just update with software and make a business model around that.
I’m going to ask this very directly. Can you envision a subscription mouse?
And that would be the forever mouse?
So you pay a subscription for software updates to your mouse.
Yeah, and you never gotta worry about it again, which is not unlike our video conferencing services today.
But it’s a mouse, yeah.
I think consumers might perceive those to be very different.
[Laughs] Yes, but it’s gorgeous. Think about it like a diamond-encrusted mouse.
You mentioned AI earlier. You have rolled out any of the AI features in the fresh versions of Options Plus. There is simply a mouse with an AI button.
Actually, sorry, Nilay. I am going to give you just a small part of information. So the mouse built this house. Is that a conventional category? Will it go away? Is it old and tired? We don’t believe so due to the fact that only about 50 percent of people usage a mouse and a keyboard today, a separate keyboard.
Some only have a mouse or only a keyboard, but many of them have both. But the thing that shocked me was that the average spend on that globally is $26, which is truly so low. This is stuff you usage all day, that sits on your desk all day, that you look at all day. That’s like the price of 4 coffees at Starbucks or little than a Nike moving shirt. There is so much area to make more value in that space as we make people more productive — to extend human potential.
Do you think the growth comes from going from 50 to 55 percent, or does it come from selling the 50 percent more costly products?
Both. Absolutely both. That’s why this is inactive an breathtaking category.
One of the things about keyboards in peculiar is that they have become lifestyle items. You see influencers on TikTok talk about their setups. We run photos of people’s setups. People have deep abiding attachments to their key switches in their keyboards. I’m assuming this is fresh to you, unless you were a diehard mechanical keyboard fan before, which would be amazing. You’re looking at it from a background in consumer products. What’s your view of that, of the keyboard as a lifestyle product?
I definitely think it’s an crucial lifestyle product. Obviously, on the gaming side, it’s a truly crucial lifestyle product, and again, it’s a real growth chance for us for many years to come. On the work side, what I’m intrigued by is that the needs of different people are very different erstwhile it comes to keyboards and mice. So we have done a good occupation of increasing this business by targeting different groups.
You have advanced users: a software engineer; a financial analyst who is in Excel all day. They request our MX line where you can do tons of shortcuts. I met individual over the weekend who — I didn’t really know this was possible — had done 120 shortcuts on 1 of our mice. I’m like, “What? I’m arrogant I have four.” But anyway, these are super advanced users, and we make MX products for them.
Then you have people who have any wellness issues due to the fact that they’re besides typing all day, but they’re sitting at the kitchen table or on an airplane like me, and they’re screwing up their arms. So the Ergo line — besides very premium, very beautiful — is truly made for them. I usage an Ergo keyboard. It’s fantastic. It truly helps on the shoulder and the arm. Then you have more lifestyle, younger people, especially in China, who want the pink mouse or who want the mouse that goes with the latest game. So these are truly different groups, and I think we have opportunities to go even deeper on those consumer needs to build precisely the right products for them.
That differentiation between gaming and professional and lifestyle, you can pull them apart. I think quite a few companies effort to pull them apart. But I think, from my view, they’re getting mashed together. The needs of a gamer and the needs of the Excel macro fanatic, they’re more the same than different in any cases. And then the high-design lifestyle category and gaming as a lifestyle are besides the same in very crucial ways. How do you pull those apart? What’s your approach to that, especially due to the fact that you have a view from the outside?
Absolutely. It’s funny. It’s an “and, and.” In any cases, you’re absolutely right, things are blurring. In China, we’re seeing quite a few people working with our gaming stuff, but then there’s besides complete bifurcation. Our top-of-the-line gaming mouse is the Pro Light, which is the most simplistic-looking from the outside: a super light, thin thing with quite a few breathtaking software inside. Whereas our top-of-the-line MX mouse for advanced users is not at all minimalistic due to the fact that it has 18 buttons and scrollers and whatever. You’ll see the same guy who’s a software engineer by day and a gamer by night usage both. So it’s a “yes, and.” And again, it’s truly crucial we realize all of those users and that we build fabulous products for them.
The truly interesting thing about keyboards and mice is that they’re tied to desktop computing as a paradigm, peculiarly mice. You can plug a mouse into an iPad, but why? You can buy the case, and Apple has quite a few decisions to make about the future of the iPad, but truly what we’re talking about is desktop computers: macOS, Windows, Linux, large monitors maybe.
There’s an endless prediction that this will go away, that mobile will take over everything. That prediction does not appear to have borne out. erstwhile you’re reasoning about Logitech’s markets, how do you measure that? Is it that yet everyone will just have a telephone and the laptop will go away? Even if the evidence doesn’t seem to bear it out, it is simply a permanent prediction in the tech industry.
It’s definitely a permanent prediction. As I onboarded at the company, I had a fewer past lessons. I went through historical documents, and this same thing came up 20–25 years ago: the PC is imminently disappearing. That has not happened, but that doesn’t mean we shouldn’t absolutely be paranoid. 1 of our innovation streams is called “Beyond the PC,” and we’re dedicating crucial resources to innovating beyond the PC.
Of course, any of what we sale today, rather a good amount of what we sale today, video conferencing, is already beyond the PC. That’s important. If you look at 1 of our fresh innovations, we announced 2 weeks ago the MX Ink, which is simply a stylus for the Meta Quest. That’s definitely beyond the PC. So hopefully you get a sense of what we’ll request to do more of in this space, but we know how to do it. I like this example a lot, the MX Ink stylus for Meta, due to the fact that it’s beyond the PC but besides helps us think about work beyond the office. Who’s going to usage that stylus? It’s creative people, it’s doctors. It’s not your conventional office worker.
One thing that’s truly hard about going beyond the PC is that there are vastly more gatekeepers erstwhile you leave the realm of Mac and Windows. It’s Apple and Google in particular. There are things that they will simply not let you to do with their devices. There’s software you can’t ship. There are drivers you can’t load. There are peripherals that won’t attach, all the way down the line. Has that been a bit of a wake-up call?
Well, it’s been an area where I’m actually very impressed. Logitech, I think, has the best set of partnerships in the industry, and it’s arrogant of it and it nurtures those partnerships. Whether it’s Microsoft, Alphabet, Meta, Apple, Zoom, we work closely with all of them, and we’re able to make products with and for them, including Apple, which is fantastic but a small secretive at times, which is their right and they’re amazing.
We just came out with a Combo contact for the fresh iPads, which is simply a beautiful product, and we work with Apple with Berlin walls around [those products]. So it’s kind of funny. My squad in Taiwan who works on that, they were wearing T-shirts erstwhile I came that said, “My work is so secretive, I don’t really know what I’m working on.”
[Laughs] That’s very good.
But that’s a truly close collaboration with a fabulous company, Apple. MX Ink is an example of Meta. And evidently we’re very close in our video conferencing business and beyond to Microsoft, Google, and Zoom. It’s a unique set of partnerships. This company was born as an American and Swiss company. That neutrality of working with all these partners is where the Swissness comes to life best.
Let me ask you to compare more directly. quite a few times in the tech planet erstwhile people complain about app store policies or restrictions on what the OS will let you do or the Apple tax, the immediate comparison is, “Well, Walmart controls what goes in its stores,” or, “Target controls what goes in its stores.” You utilized to work on Head & Shoulders, and if you wanted the end cap at Walmart for Head & Shoulders, you had to pay them any extra money for additional marketing. The analogy is there. It comes up all the time.
You’re a very unique individual to ask this question of, due to the fact that I have always thought, well, Walmart has competition. If you’re not getting a favorable rate to put the shampoo in Walmart, you can go to mark or the grocery store or Walgreens or wherever else. The platforms do not have that in that way. Have you felt that yet in your 7 months?
You’re right that they don’t in that way. If I usage video conferencing as an example, there is competition. Microsoft is evidently very large, but there is Google and there is Zoom. We do work truly well with all 3 of them and we value all 3 of them and we put crucial resources against all 3 of them, and they do the same with us. It’s not like there’s only one. And that’s actual erstwhile it comes to virtual reality as well as beyond the PC. It’s a real competitive advantage for Logitech to have this scope of partnerships and not just be in bed with any 1 of them.
Are there things you’d like to build or ideas you’ve heard that are being blocked by the various rules that the mobile platforms have in place?
No. Again, it’s been 7 months so this may change, but from what I’ve seen, we can talk about everything, including with the very large boys. I love that and I think that will lead to any truly large innovation going forward.
But if you wanted to have the AI button on a keyboard connected to an iPad that brought up your overlay and Options Plus to make a prompt, Apple would simply not let you do that on iPadOS in the way that you can on Windows and macOS.
Yeah, and again, I’m not certain that’s something we would die on our sword for.
Makes sense. The another part of the puzzle here is fundamentally everybody at any point tells me that they won’t die on their sword to proceed connecting to Apple, but it just seems very apparent to me that comparison to retail falls apart due to the fact that there are so many more retailers.
Yeah, although Walmart, don’t underestimate the size of Walmart, surely in the US.
Fair enough. The another planet Logitech lives in is the planet of standards. There’s USB for nevertheless much you’re going to play in the smart home. There’s Matter. There’s Bluetooth. all time we do an episode on standards, we discover it’s intensely political and almost not method in a very circumstantial way. Has that come up for you — “Boy, we request to make certain that the next version of the USB standard can do all the things we want it to do”? Or are you saying, “We’re going to let the platforms figure that out”?
We’re truly active in all of the manufacture forums and associations that talk about standards due to the fact that it is truly crucial for us, not just for the platforms. I would say the most crucial thing is that there is simply a standard because, erstwhile there isn’t, that just creates complexity and cost for everyone. We’re active and always trying to go for a standard.
I think we’ll gotta go to any fresh standards as well. 1 of the things I’m rather arrogant of at Logitech is that we carbon-label our products with a truly solid methodology. It shows that your mouse is 1.5 in terms of emissions and your keyboard is 15 and your video conference, I don’t know by heart, but it’s a lot more. What would be super interesting is if we could get to an manufacture standard for carbon labeling so that consumers and corporate consumers can make a choice on a product that has lower emissions. That’s 1 of the things we’re trying to work with any manufacture associations and groups on. But in general, standardization is crucial for the industry, and we’ll push that as hard as we can.
Did you open a door in any office at Logitech and find the people who gotta work with the standards board and it’s just a group of sad lawyers?
They’re truly exciting. They’re great.
There’s not quite a few them. There’s like one, but they’re super active.
You’ve talked about climate and sustainability respective times now. Let’s talk about it in the context of AI. A bunch of the large companies, in peculiar companies investing in data centers and foundation models, they’re blowing their climate goals out of the water due to the fact that they’re spending so much more in energy to power these AI systems. Those things are evidently in tension. You’re in on AI. You have Options Plus. You have the buttons on the mice. Then you’re besides talking about being sustainable. How are you managing that tension?
Clearly we’re not building LLMs ourselves, so the impact of our stuff is very modest. It’s on the edge. In the context of our full footprint, we don’t anticipate that to have a crucial impact. Our impact sits in materials and components, in PCBs and plastics, and it sits in the circularity, or the deficiency thereof. due to the fact that we sale stuff, hardware, and that’s a immense part of our footprint.
So that is not where I’m concerned, but clearly, as an industry, we should be super afraid about the fact that beautiful much all player has goals to be carbon neutral by 2040 or 2050, but right now the numbers are only going up and up and up. That is very concerning. We’re a comparatively tiny player, but I hope we can be a pioneer and show the way on taking real climate action alternatively than just buying offsets.
Some of your goals are utilizing more than 70 percent recycled plastic in manufacturing. Can you get to 100 percent? Is that feasible?
We should be able to get very close. The first precedence for us on our glide way to a 50 percent emissions simplification by 2030 is to grow what we already know how to do. I’m truly arrogant that Logitech is already at 75 percent of products utilizing recycled plastic. That is huge. Unilever, Nestlé, Procter & Gamble, they’re like 20 percent. This is immense on a large number of products all year. We besides know what to do in terms of low-carbon aluminum, low-carbon any another things. We’ve got to scale what we already know how to do, and I think we can get very close to 100 percent.
Then we gotta usage renewable energy wherever we can due to the fact that that is simply a large part of our footprint. And then 3rd and fourth, we gotta innovate and we gotta drive circularity. The last 1 is most likely the hardest innovation to come. PCBs are a large focus for innovation. They’re a large part of our footprint as well, and they’re very carbon-intensive. We know what the 4 pillars are: We gotta scale. We gotta usage renewable energy. We gotta innovate, and we gotta go for circularity. And then I think we have a fighting chance to actually be minus 50 percent and again grow the business due to the fact that that’s the tricky thing here and that’s what Google and Microsoft are truly struggling with right now.
Can you rapidly specify circularity?
The forever mouse, and the forever mouse could be the mouse that you keep and we just send you software updates, but it could besides be the mouse that you turn in at Best Buy and we get it back or Best Buy takes it back and refurbs and resells it, which is another business model. We’re starting to do that but not yet at the scale that we request to.
Let’s end on the forever mouse due to the fact that I’m fascinated by this concept: the thought that you would have a mouse and you’d buy it erstwhile and then you’d possibly pay any fees for software upgrades or you’d trade it in and get a newer one, and that would be a recurring gross origin for you. That all depends on a imagination of what the mouse software should do too just decision the cursor around. But whenever we do episodes with anything to do with AI, our audience is like, “We don’t want this.” In a very direct way, sometimes they’re like, “We don’t want this and we especially don’t want it here.”
We might want it erstwhile we want it. I might want to usage generative fill in Photoshop on my terms, but I don’t request it to follow me around the computer. And even if you’re saying the climate impact is minimal, I surely don’t want to feel like there’s any climate impact of utilizing my mouse and expanding the scope of places where you might go ask OpenAI for inference. That’s 1 problem. The second problem is you’re inactive competing with OpenAI and Google and Apple to be the primary interface for their backend services, right? You’re not training your own model.
The question for me is truly twofold. It’s one: is there a imagination beyond “the software will do more for you” than just drive your mouse around? And the second part is: even if it can do more, can you realistically compete against the giants that have all incentive to make certain that you never look anywhere else?
On the second piece, this company has been a human-technology interface for its full existence. And while the mouse built this home and possibly there won’t be mice forever — although I think there’ll be mice for a long time to come — we’ve always been that human-technology interface. There were always people who said, “Well, Google and Microsoft won’t want you to be.” In fact, they frequently come to us and say, “We want an interface.” So, that MX Ink, it’s not that we were pushing Meta truly hard. It was Meta saying, “Oh, we’d love for you to do something like this,” and us saying, “Well, we think we can.”
I think the large players will proceed to want to work with players like us who have the luxury of focus. For us, a $40 million thought is 1 percent growth. Whereas, for Microsoft or Google, that’s nothing. That luxury of focus is important, and I think we’ll proceed to be a human-technology interface in that way. Should the mouse do more than just decision the cursor? Absolutely. And it does that today, and I think likewise about being more productive with shortcuts to the large language models and all kinds of another things. The guy that I met at a barbecue over the weekend who has programmed 120 shortcuts on his mouse, that’s the kind of stuff that can extend human possible in ways that are healthier.
This thought — that Logitech sits at a machine-human interface — right now, it’s expressed in Options Plus. Your software that has AI in it is fundamentally prompt engineering, right? You’re guiding people through the process of making a prompt, which is, for better or worse, how we are all talking to AI right now.
Is that it? Is that the vision? Is there a different vision? Is that just the stopping point right now?
No, I think we’re at the beginning of AI, and [with time], it will become multimodal and we won’t even request to build prompts due to the fact that it will know what prompts we need. Things will evolve precisely how that will evolve. Who knows? But I think the human is going to be a limiting factor. Human hands, the human brain. I fishy we’ll inactive request human-technology interfaces. They may not look precisely like what Logitech sells today, but I think the future for human-technology interfaces is really, truly bright.
The danger there is that’s besides what Apple and Microsoft and Google see. I talked to Sundar Pichai and Satya Nadella, and they happily tell me that AI is simply a platform shift. And what they mean is that it’s an interface shift, that we’re going to get the telephone out of your hand or you’re going to deal with something else that is not Apple’s phone. That’s very much what they mean.
What they’re talking about is, “Okay, you’re going to talk to the computer. It’s going to do stuff for you.” Or, “You’re going to issue a set of commands, and the computer will figure out how to do whatever task you want it to.” You can already see they’re getting there. You can see any of the demos of the concepts. Do you worry about that disintermediating Logitech?
Yeah, but again, there’s inactive going to be technology, whether that’s an AI button or something else. I think Logitech did a truly fine occupation surviving the shift from PC to telephone and inactive being a fabulous interface. I’m beautiful certain that with the fabulous engineers and designers we have, we’ll besides be an interface to whatever’s next.
Well, that’s a large place to end it. Hanneke, tell the people what you think is next for Logitech. You’ve been there for 7 months. What’s the stuff you’re looking forward to now that you’ve figured it out?
We’ve got a large bunch of innovations coming up. I could tell you, but I’d gotta kill you. [Laughs.] As we go toward the end of your holidays, I think we have a truly bright fiscal year ahead, and then we’ll proceed to extend human possible in work and play.
I love it. Well, the mouse built this house. This is amazing. Thank you so much for joining Decoder.
Alright, it is so good to see you, Nilay.
Decoder with Nilay Patel /
A podcast from The Verge about large ideas and another problems.
