The stock: LOGI
What it does: “The mouse built this house” is a popular saying in their offices across the world and we bet you still have an old wheel mouse of theirs in your garage along with your old Atari (oh how date ourselves!)
What happened:
In a recent appearance on the Decoder Podcast with Nilay Patel, new-ish CEO Hanukkah Faber waxed poetic about the potential forever mouse which could even come as a diamond-encrusted version.
Listening to her explain it, it would be a mouse which one could rent or buy and for which users would pay for software updates. The reactions online were savage especially when she went on about reducing their carbon footprint by 50% by 2030 while in the same conversation introducing cloud based over the air software updates Which Comes with its own set of sustainability challenges.
Even though the reaction online was savage. A few choice comments from The Verge’s page itself:
“If this CEO thinks mouse subscriptions are the key to building recurring revenue, she needs to get a clue.”
“If she thinks I’m going to pay a subscription service for a goddamn mouse, she’s out of her effin mind. But that’s how CEOs see all of us – they want to milk all of us for what we’re worth. Don’t let them.”
“There’s clear a limit on how far you can grow a business based on peripherals like keyboards and mice. I use Logitech exclusively and I like their products but no one is getting into subscriptions for cheap accessories.”
(and that’s not counting Reddit and other outlets!)
It is a move that can be done and which would be go a ways to bringing about a more predictable cash flow. Which CFO does not like a more predictable cash cow that also grows?
Th situation:
LOGI is down about 3% YTD as of this writing while the S&P is up about 18%. Keeping in mind that mice represent LOGI’s third largest category by revenue (not including gaming mice which are included in their GAMING category), introducing such a product could potentially shake things up and get them in the mouse as a service business. Their annual report makes mention of “Business Seasonality and Product Introductions”. Even if only, a small slice of current customers wants to have the luxury of switching mice at a pre-agreed upon cadence or replacement cycle while enjoying the feeling of a brand new product (even if it is refurbished), as long as they are willing to pay for that service, so be it.
AI (Arguable intellectualism) Corner:
Our staff had a kick out of reading 2021’s HBR article by Insead’s Atasu & Van Wassenhove plus Accenture France’s Dumas (recently promoted as a Principal Director as of early 2024) where a vigorous debate ensued about where Logitech would be in the quadrants and the popular vote leans to bottom right quadrant.
“Products in this quadrant include many small high-tech devices, such as smartphones, which have a lot of highly integrated components, toxic materials that are difficult to extract, and very short life cycles. These products typically have busy secondary markets, which is positive from an overall environmental perspective but impedes original manufacturers’ access to them.”
While LOGI’s mice do not have a robust secondary market, the company also does not have easy access to them once sold through their various sales channels. What many of us at AI CG do not get is why the value add for such a potential program is in software (Let’s sell software updates to these customers:) and not customer convenience and satisfaction that comes from buying or leasing an awesome great quality mouse from them?
As an aside:
https://www.accenture.com/fr-fr/insights/consumer-goods-services/circular-economy
is a good read and upon further intellectual diving, we notice that the circular economy has its roots in the CPG industry. And guess who has a longstanding history in said industry, yes, Ms. Hanneker herself with stints at:
Unilever (Dove, Vaseline, Axe among others)
Ahold Delhaize (various supermarket brands and their assorted private labels such as Giant, Delhaize and Food lion to name a few)
Procter & Gamble (Pampers, Gillette, Crest, Old Spice)
In conclusion, what appears as a whack idea might not really be that far off the reservation if the numbers work (that’s when you hire the large consulting companies for a fee right?). Disrupting a cash cow business and changing a business model that has worked for decades might be the fastest way to a strong severance package but it can be bold ideas and ones that sound totally bats***t-crazy that work sometimes: DVDs by mail , municipal tap water filtered through reverse osmosis systems water that magically end up as natural water on our store shelves, renting your apartment to a complete stranger while you still live on your couch and the list goes on.
Feedback/ Comments: marcosapsiwai@proton.me
And if you do work for any of the companies cited and wish to say a quick hi to us, please email us with your ticker symbol at the beginning of the subject line if you are public and if you’re not, your full company name and website.
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