Logitech in financial trouble. "Discontinue... console peripherals"
- Thread starter paskowitz
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bermudakid
(Banned)
- 2,561
- Connecticut
- BermudaKID
- BermudaKID
- 3,239
- New York
- thepatriots
I would not want Thrustmaster to be the only game in town...
- 106
- Victoria
I"m agonizing over picking up a spare G27, I hope to high heaven they they don't stop producing the g27 and simply ditch all those cheap console wheels.
- 4,004
- Croatia
I really wouldn't bet my money on that.
The *decision* to postpone any new wheel developments and practically close the "wheel department" has been made during 2010.
From what I know, there reason was profitability of the division, because apparently the complete wheel production was not a income-justifiable for Logitech.
There is something that nobody takes into concern, and those are sheer costs Logitech needed to endure in order to have their wheel models in the market in way they had. And actual production costs are just a fraction of overall costs.
Just remember how you could actually buy Logitech wheels in almost any country in the world. You could basically buy them in the supermarkets, including the G-series models. And they all came with sweet prices of 300$/E for DF series and 400$/E for G series. It was way too small price to cover for actual manufacturing, packaging, transport, distribution, stocking and retailing with margin for retailers. It was just not financially viable. We can argue how DFGT manufacturing costs could not be more then 50-60$/E in big quantities, but once you start to include all other costs needed to deploy the bulky and heavy box at worldwide market and ensure you are selling it in the affordable price, I guess there is only small bits of actual profit left on the table. Not even to speak about nightmare called "refreshing the stocks" and "managing the demand" on +100 markets in the world.
And there is final factor, so popular in "game sales age" discussion called "shipped vs. sold". We can only guess about it in finite margins, but retailers for Logitech products (or majority of tech-equipment) actually "buy" the stock from distributors. And many big manufacturers are selling their goods within "packages" (for example: if you want to buy 1000 keyboards for your stores, you also have to buy some quantity of mouses, headphones, wheels, etc. in order to qualify for the big discounts. And you want a best discount imaginable because you want your profit margin as high as possible..). And wheels are not fast-moving goods. They are selling in extremely low-speed when compared to other peripherals and they sit on the shelves and occupy the space. From retailers perspective I see wheels as very "risky" good in long-term and I can only presume how majority of retailers that were buying the products from Logitech in *packages* were not very pleased with actual retail-potential for the wheels.
Yes, Logitech made great wheels. Yes, they revolutionise the overall genre. Yes, we all have and love their wheels. Yes, we were all happy with those prices. But also, yes, Logitech also didn't actually make no serious money on them, if they even did IMO.
Logitech was/is probably the only company that could build a new wheel that had the same level of tech as T500RS or CSW / Elite and still come in at under 400$ and it would have bullet proof reliability too.
As someone who was very happy to had a chance to be owner of DFP, DFGT, G25, G27 and later T500RS, GT3 V2, GT2 and today CSW/Elite, I have to say how G-series (G25/27) is not built on the same level of quality as T500RS or Fanatec wheels (especially CSRE/CSW). You can compare them from some perspectives, but the *level of tech* is not even close from any perspective.
There is a reason why Logitech wheels were so cheap and that is also the reason why they were probably not profitable. I could also argue how even the 500-600$/E price does not cover Thrustmaster's actual cost for having T500RS internationally on the shelves, but it is another subject.
I hope they will not be, the competition is good. I am very sad about this news for Logitech, because I would also love to see G29 (or whatever it would be called) being actually made. But at this point I honestly think how chances are very slim.
- 4,004
- Croatia
I can't disclose my sources really, I hope you understand. However, I've just made another round of talks and here are some more details:
Back in 2010 Logitech closed many of its European distribution outlets die to failing profits made by huge expand of the company from 2005-2008 when their overall business was rising.
In 2010 they've literally pulled all stocks of various products - including wheels - from their central stock in Netherlands back to factory in China in order to *adjust* all stocks from EU to US market (regulations related to electronics standardisation are different and various modifications to labels and power-sources had to made at factory). In 2010 central stocks in Netherlands were already cleared of all wheel stocks basically. All wheels that remained within distributors network were quantities ordered prior to 2010.
Those *refreshed* EU stocks were used to resupply the Asian and US market with DFGT model (which also went through box-redesign) when GT5 released and my source claims how no new quantities of wheels (any model) were produced after 2010.
He also points out how complete operations were transferred from EU division to US division and how their initial restructuring - which resulted with news from yesterday - already begun with *transform* process of peripherals division (where both console and PC peripherals are) from late 2010 to 2012 - where they practically discontinued manufacturing of 5 or 6 groups of products (not just wheels, but also gaming controllers and such).
I got information about 2009 forecasts which influenced 2010 decision to discontinue wheel division due to drastic decline of actual wheel sales from period of 2005 to 2009.
My source couldn't confirm me under which category Logitech reports and groups wheels within their investor-reports (as one officially disclosed yesterday), as "Retail - PC Gaming" or as "Retail - Other", but he says how it is indicative that report notes how "..Certain products within the retail product families as presented in prior years have been reclassified to conform to the current year presentation, with no impact on previously reported total net retail sales". He argues how there is strong possibility that wheels have been included within "Retail - Other" category because he notes how overall decline in results points to that - because decline in wheel sales is drastic as results reports under "Other", and not small as decline that can be observed within "PC Gaming" category. He illustrates how back in 2008 the overall orders for wheels were 300% greater then in 2010 due to heavy stocks distributors/retailers had sitting on their shelves in period 2008-2010. And he concludes how actual demand in period 2010-2012 was non-comparable even with 2008-2010 period, not even to mention crazy numbers Logitech moved within *Golden Era* of 2005-2008.
It was inevitable it seems.
- 9,295
- Duisburg
As if some some beancounter went and kept a non-profitable product in production because someone, somewhen labeled it as "PC peripheral" instead of "console peripheral"
They'll keep the wheels around if they're generating profit. That's tough with a niche product, especially when the market is declining instead of growing.
- 23,800
- Philippines
300% That represents a 2/3rds volume loss in two years... much greater than the overall 14% trend reported in Yahoo.
Figures, though... a good wheel is a very expensive peripheral, and very niche, as you're only ever going to use it on two or three games.
Figures, though... a good wheel is a very expensive peripheral, and very niche, as you're only ever going to use it on two or three games.
- 9,148
- United Kingdom
- neema_t
Wow, so they haven't actually been making wheels at all for at least two years? Crazy. Better get on with designing 3D printed replacement parts for my G27 then!
ItsHim
Premium
- 1,414
- Bavaria/Germany
Makes sense what amar said, I got my g25 dirty cheap from amazon around that time.
On the matter of stock prices: they (should) reflect the value of all future income, discounted to the present day. Expected lower income in the future => lower stock price. That's the theory anyway.
A single loss in a single year should not affect stock prices significantly. Only if its expected to stay that way.
On the matter of stock prices: they (should) reflect the value of all future income, discounted to the present day. Expected lower income in the future => lower stock price. That's the theory anyway.
A single loss in a single year should not affect stock prices significantly. Only if its expected to stay that way.
- 4,004
- Croatia
It is probably related to "shipped vs. sold" reporting.
Logitech probably had approx. 20% fall of volumes related to shipping to distributors, but overall decline of actual sales retailer-wise was 300% in 2010 compared to 2008 - or to be more specific, the fall was approx. 70% in absolute numbers - instead of selling 100 pcs. of wheels retailers were selling only 30 (in relative numbers, for illustration only).
My info comes from retailers/distributors, not from Logitech. So, there could be some discrepancies, but I guess overall picture is more-less accurate.
As if some some beancounter went and kept a non-profitable product in production because someone, somewhen labeled it as "PC peripheral" instead of "console peripheral"
They'll keep the wheels around if they're generating profit. That's tough with a niche product, especially when the market is declining instead of growing.
Pc gamers is more demanding then console players. Seeing the popularity of the gseries I would hope they would go plus on them.
- 15,532
- Cairo, Egypt
- GTP_SEMS
Thanks for the clarification amar212. It´s natural that you produce wheels in quantities to make production costs lower. You have no info if the R&D department from Logitech has lost their job? That would be more worrying. In the best world scenario they are cleaning out the G27 to make room for the G29 in 2014 
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- 227
- Montreal
- SUPERNOVADAVE
- SUPERNOVADAVE
your right it isn`t declining but at the same time it isn`t growing as it needs to.
Intel has publicly announced his morning that they are getting out of the desktop motherboard business to concentrate on the growing smartphone and tablet business.
the only way we as a group can turn this around is to start spending.
i myself in the past month have purchased $3400 in pc parts so that i can continue to run the latest games and software.
i hope i can say that i am doing my part.
- 6,598
- United Kingdom
- MSTER232
- PS3 =/= Xbox 360
It's looking like once people's DFGT/G27/G25 wheels break, they're going to have to switch to either Fanatec or Thrustmaster 👎 .
Mayaman
Premium
- 2,224
Agreed, so speculation of future profits once again.
And as for us to spend more, I think my two Alienwares are spending enough lol. I think that companies need to reign in these projections, because as soon as they don't meet them the greedy shareholders have a panic attack. Happens every day. Sigh.
Mayaman
Premium
- 2,224
I built my own machines for years and I'll take these Alienwares any day. I'm kinda tired of the "I could build my own rig/computer/car/zepplin/nuclear reactor myself and save 1,000.
Some of us don't have the time to worry about building it and like the pick up the phone, order, and open a box full of sexiness.
There is so much haterade on the internet. "Hey dude, you're such a sucker for buying that rig/computer you could have easily spent X amount of time building your own and rocked with the underground scene"
Yawn.
Some of us don't have the time to worry about building it and like the pick up the phone, order, and open a box full of sexiness.
There is so much haterade on the internet. "Hey dude, you're such a sucker for buying that rig/computer you could have easily spent X amount of time building your own and rocked with the underground scene"
Yawn.
No hatered here. But If I can build a case in an hour or two and save 1000$ I feel like that is a much better deal. Kind of surprised you would go alienware if you are used to building your own but I suppose they at least offer a good service if something breaks.
Installing OS, Software and trouble shooting is the tedious time consuming parts of the job.
Installing OS, Software and trouble shooting is the tedious time consuming parts of the job.
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