Logitech Digital Pen “IO”

Brian M ., Kajen L ., Sajeeb M ., Tim O ., and Tobby L.

Company Background• Designer, manufacturer of Computer peripheral products

• Internet video cameras, mice, keyboards, gaming controls, audio headphones

• 1981; manufacturer retail

• Operating headquarters in California and Switzerland

• Trades on Swiss Stock Exchange and NASDAQ

Company Background• Hardware & Software Development Contracts-> OEM

(original equipment manager) contract with HP to mass supply mice

• Good quality and control led to growth from Apollo, AT & T contracts

• 2001:Holds 45% of PC camera MS, leader in Mice, pushing Intel out of Webcam Business

• 65,000 retail outlets; 100+ countries

Product Development

• What is the need/innovation??– Untethered freedom

• “IO” has licensed the pen technology from Anoto

What’s in the box?

– Logitech IO Digital Pen– Specially designed Digital Paper– Software

Product Development

Product Development

1. Optical sensor captures everything you write

2. Processor digitizes your words and images

3. Rapid-charge USB cradle transfers digitized data to your computer

4. Ink cartridges let you write like you normally do

5. Memory stores up to 40 pages between transfers

6. Battery lasts up to 25 pages between recharges

7. Cap controls on/off -- remove to turn on, replace to save battery

Product Development• Digital Paper Technology:

• Paper has dots that are 0.3 millimeters apart

• Every collection of dots provides information about the XY co-ordinates of a pen

• Built in camera recognizes the positioning of the small dots

• Allows the user to go back and write on the previous pages

Product Development

Product Development

• Digital Pen Demonstration (Animation)• http://www.youtube.com/watch?v=Tox3mJ2A

wGA

• Comparison With Competitors

Competition& Technology• PDA• - Created the Palm Pilot 1000 in 1996.• -Device had four key features. They included size, handwriting recognition, key programs and portability.• - Downside of the device was that the screen was too small and users had to learn how to use the

graffiti program. Functionality in general was limited.

• Microsoft & Tablet PC’s• -Microsoft and their partners announced in 2001 that they would creating Tablet PC’s• -Developed a fully functional Tablet PC in November of 2002.• -Also developed an application called Journal that would turn handwritten cursive or block letters into

editable text very efficiently.• -Microsoft planned to adapt its operating system and Office XP to work along with Tablet PC’s

• Seiko• -Enables an ordinary pen and paper to become a computer input device for notes, diagrams and

sketches.• -Several documents or pages can be worked on at the same time.

Key Issues / Problems/ Decisions

• Is the target market known for the IO pen?

• Determining if there would be enough demand to further fund R&D for the pen

• Did the Logitech IO pen have what it takes to be successful in the market

Network Analysis

SCENT

Sharing Value• The key players that share value are Logitech, Anoto AB

and Microsoft.• The way they would share value is that Anoto would

provide the technology for the pen and the writing recognition and Logitech was to provide the memory space in the pen and the software that would translate it into text once transferred to a computer.

• Microsoft would provide the operating system that Logitech would use to run their software.

• Microsoft is to receive royalties from Logitech for the use of the operating systems.

Creating Value• Customers would be able to purchase this pen for a price of

$199. Compared to other innovations such as laptops, the pen was seen as an affordable.

• Logitech created value for a couple of specific customer targets. One was architects and the others were salespeople.

• The customers who used the io Pen found it to be valuable for a couple of different reasons.– One was that they could bring it with them anywhere they went.– Other was that it also worked not only for writing, but for

drawings as well.

Enhancing Value• Logitech determined that their potential market users were

engineers, architects, marketers and salespeople.• Architects and engineers found this pen to be useful for one

main reason. It was that the pen would also recognize the drawings and not only writing.

• With the internal memory found on the pen, the transfer of notes and/or drawings of users would be easily transferred to a desktop or laptop through a USB connected cradle.

• Along with Logitech reducing the price of the pen, they can look at things like the battery life of the pen or how much paper will be included each time a customer buys a book.

Network EffectsDirect • Weak• If digital pen technology

can become a household item..

• Greater availability to purchase paper

• Consumers need to realize the benefits:– More natural– Carpal tunnel less an issue

Indirect – Strong• Needed: Pen, Paper,

Computer• Most people have a

computer• The more adopted the

product becomes the paper will be more convenient to buy

Threats• Paper and

inconvenience?

• Size of the pen

• Competition (Tablets, PDA’s)

• If the pen doesn’t take-off, it will be very hard to sell enough to continue the project

• A need to evaluate is there is a need, is the product desirable?– Only appealing to

intense note takers?

Implications

• Whether or not Logitech decides to continue with the IO pen, will depend on:– the success of the launch of IO– Logitech’s ability to convince the market that their

product is better than anything else available.

• Untethered is an attracting selling feature, but if consumer’s don’t buy into it, a successful launch will be unlikely

Strategic Alternatives • 1st alternative: Proceed with pursuing a second

generation Logitech IO.

• Company should produce and re-design more digital pen each year so that second generation will have more choice and they will get interest of purchasing more digital pen.

• New style or cool design will make them more attractive so that young generation will use it as a style.

Strategic Alternatives • 2nd alternative: Cease Production after 1st generation IO.

• Company should stop producing more digital pen because for the first time they have to wait and see how the first model runs in the market and what consumer wants and need.

• Consumer will get bore of same kind of product if they see each year. As a result, customer dissatisfaction and the market will fall.

Strategic Alternatives • 3rd alternative: Cease productions to further develop

the product and then continue with it.

• Currently the size of the digital pen is bigger which is fine for the first time development with this model but they should not continue with this because consumer may not like to use different model with a same size.

• Thus, they have to change their technology and design in order to make it smaller.

Evaluation of Alternatives • Pros:• Alternative 1: • Logitech and Microsoft are working together

because Microsoft has planned to adapt its operating system, Office XP, to work with Tablet PCs.

• Anoto AB is a definite fit with Logitech’s vision of extending the power of the PC beyond the desktop.

•

Evaluation of Alternatives

• Alternative 2:

• Logitech has flexible price and suitable for students.

• Lots of features and easy to use.

• It has direct network effect.

Evaluation of Alternatives

• Alternative 3:

• Logitech Pen has portability and has ink feedback.

• Augment laptop use, especially with drawings, use away from laptop.

Evaluation of Alternatives • Cons:• Alternative 1:

• This product is the 3rd choice of the company, not even 1st priority.

• Can alienate Microsoft in the regular market.

• Anoto Functionality depends on three components working together and without any one component Anoto cannot function properly (especially digital pen technology).

Evaluation of Alternatives • Alternative 2:• For Palm Pilot: the screen was too small, users were

unwilling to learn to use Graffiti, and functionality was limited.

• IO allows you to capture notes in an area where it is unsuitable or inconvenient to carry a laptop.

• Logitech IO had a minimum memory of more than one megabyte, sufficient to hold only 40 full pages of text and drawings.

Evaluation of Alternatives

• Alternative 3:

• Does not have pen input and might be too expensive.

• It takes time to write and would be hard to carry.

Recommendations• Alternative 3: Halt the launching of the product, continue with the

development of the product but place it under a concept line while monitoring it. (Similar to the Honda Robots)

• Allows more time for development of the product to ensure maximum benefit

• Allows the spur of discussion and comments and reviews, getting feedback on the product that can be used for further development or changes (ST)

• Allows time for the customers to be familiar with the product and the technology ; customers are aware that the product has been created and monitored and improving; anticipation of the product(LT)

Recommendations• Logitech is a well established brand, with a strong positive brand image, their

products usually give customers confidence, and should not launch a product for sale that is under so many questionable areas

• Since this is only the third priority project in the department, the project can be continued and monitored until maturity, no need to force it out into the market since it’s not the first priority and not the highest revenue generating product

• Although there are other similar digital writing devices and products, the idea of the digital paper and internal memory digital pen is still new; a lot of product awareness, advertising will be needed

• High tech products are often created with high expectations but many of those products fail to meet expectations, especially in this case where there are no previous reference or comparisons that can be made to, it is a risky project

Recommendations• The target markets are relatively small and really

serves a niche at this point, mainly engineers, architects

• Limited research and survey has been conducted, although research such as percentage of those niche market uses pen in daily work, insufficient research has been done to show correlation and confidence that the IO will be favoured by these groups

RecommendationsImplementation• Keep R&D teams working on the project over a stretched period

of time

• Product will appear at press conferences or new technological shows and demos

• Surveys, interviews, focus groups can be conducted throughout the development of the product

• Monitor the economical changes, the trends and the competitor’s similar products

Recommendations4 P’s • Product: Product concept will be the same, with slight modifications to

the design, functionality of the product, and technological improvements greater target audience

• Price: Reduce price with R&D and later versions of the product, $199 is relatively pricy, cut costs and through production practices to reduce price

• Promotion: Through demos and showcases, to create awareness, and increased advertisements near projected launch dates

• Place: Distribution at all retails and carriers

IO 2

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