What goes up must come down, the tech industry is feeling that law right now. From record-low PC sales to dismal waves of layoffs hitting big names like Google, Microsoft, Amazon and HP, companies are having to readjust after getting used to pandemic-fueled business conditions like lockdowns and working from home . The latest is Logitech, one of the kings of the tech pandemic boom, painting us another picture of the downsides that come with those short-lived spikes.
On Monday, Logitech announced results for the third quarter of fiscal 2023, which covers the three-month period ending December 31, 2022. Sales fell 22 percent compared to the third quarter of the previous fiscal year. This includes drops in PC webcams (49 percent decrease), portable audio and devices (34 percent), mobile speakers (32 percent), keyboard and keyboard combos (22 percent), and pointing devices (14 percent). hundred). In the nine-month period ending December 31, Logitech experienced a 16 percent decline in net sales year-over-year. (This includes revenue from streaming services from its Streamlabs division.)
That’s a stark contrast from May, when Logitech announced record sales from April 2021 through March 31, 2022 (fiscal year 2022), and from April 2021, when the company announced a 76 percent increase in sales year-over-year from April 2020 to March 2021.
“These quarterly results reflect the current challenging macroeconomic conditions, including currency exchange rates and inflation, as well as lower business and consumer spending,” Logitech Chairman and CEO Bracken Darrell said in a statement. accompanying Monday’s announcement.
Logitech also noted “concentrated” purchases made during sales events. In an earnings call today, Logitech executives pointed to falling business demand for mice, keyboards and video conferencing technology. However, Darrell noted that Logitech is gaining market share at the “high end of the fast-growing market,” and the company also claims to have gained market share in pointing devices, despite “lower end pressure.”
Consumers and businesses had to make countless adjustments as lockdowns swept across the country during the height of the COVID-19 pandemic. Hardware companies followed suit, adjusting marketing approaches to highlight things like webcam features, home office ergonomics, and portability for hybrid jobs. Some companies enthusiastically increased the number of employees and touted high sales figures.
Logitech has been growing since 2015, but as with other tech and peripherals companies, the pandemic accelerated that growth. Now that lockdowns have largely been lifted and many consumers have made the necessary tech purchases, things aren’t so rosy.
Corsair is another example of a large peripheral maker seeing slowing demand. Its most recent financial results, shared in November, showed that quarterly revenue for gamer and creator peripherals rose from $89 million to $96.8 million year-over-year. But the company had previously been enjoying much stronger growth: in 2020, its Gamer and Creator Peripherals segment saw revenue increase 104% year-over-year, and in 2021 net revenue for Gamer and Creator Peripherals increased 20% year over year.
All of this is just a microcosm of the tech sector, where the problem has been underscored by thousands of layoffs in recent months.
For prudent companies, the decline in technology demand is not unexpected. In November 2020, Logitech’s Darrell told Barron’s that the company did not “expect to grow at 75 percent forever,” but rather anticipated a “long-term growth mode” fueled by people increasingly needing to work across multiple media. places.
But after the pandemic buying spree, peripheral makers are facing the same challenge PC makers are facing right now: finding a way to convince customers they need a hardware upgrade that isn’t really so old. In the PC world, vendors are turning to modern features and services like AI-powered webcam plug-ins, remote management options, and virtual concierges.
It’s unclear how peripheral vendors will try to appeal to the hordes of consumers who bought webcams for all those home office video calls, or some shiny new mechanical keyboards to upgrade their setup during the pandemic. Such PC accessories rarely get new life-changing features that make people want to ditch a functional alternative they already have. Logitech’s Brio 300 and 305 webcams announced last week, for example, have minimal differences from the vendor’s similarly priced cameras.
On Logitech’s earnings call, Darrell claimed that the upgrade cycle “is coming, it’s already started and it’s going to continue for a long time.” He expressed optimism about decreasing supply chain bottlenecks in China as well. However, in an interview with Reuters today, he declined to comment on future consumer demand and seemed unsure when the good times will return.
“This is temporary and it will eventually come back. I can’t say when, but the growth will continue,” Darrell said.