Will Logitech’s Google TV Device Be a Loss Leader?

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Google TV-related products will eventually be as profitable for Logitech as its entire lineup or PC peripherals, CEO Jerry Quindlen said during an earnings call for the company’s first fiscal quarter today.

Logitech saw better than expected earnings during the quarter and in turn raised its sales outlook moderately (up from $2.3 billion to a range of $2.3 to $2.35 billion). Missing from that outlook is any increased revenue from Logitech’s Google TV set-top box dubbed Revue, which is scheduled to go on sale this fall. The company announced that Revue won’t contribute to its bottom line because it plans to reinvest any gross profit straight back into consumer marketing.

Asked about the motivation behind this arrangement during the company’s earnings call, Quindlen said that these investments reflect Logitech’s view that this is “a great opportunity” for the company to sell peripheral devices. He also hinted at the fact that the marketing investments may be part of Logitech’s deal with Google to be part of the initial launch lineup for the new platform by saying the spending was “not our discretion.”

Logitech has long said that it views its set-top box as an opportunity for add-on sales, with Quindlen telling me in an interview in May that Logitech is looking at video calling in the living room as an opportunity to sell some of its webcams (see the complete interview embedded below). Quindlen said during the earnings call that gaming on Google TV devices, for example with Flash games, would offer additional opportunities.

However, it looks like Logitech is going to expand its product line to actually sell apps as well. Quindlen didn’t want to share details about the company’s app monetization strategy during the earnings call, but the slides for today’s earnings (PDF) list apps as part of the company’s fall line of products. Quindlen said that there will be Logitech apps available at launch, and that the company is working on additional apps to be published down the line. These could include both apps for Android smart phones to remotely control Google TV devices, as well as apps residing on the device itself.

One question unanswered today was the pricing of the Logitech Revue set-top box. Google and Logitech are exclusively cooperating with Intel on the chip sets for Google TV devices, and TV manufacturers like Panasonic have in the past lamented the high price point of Google TV hardware. Logitech could decide to aggressively price its companion box to capture the market and then make money down the line with add-on sales.

Quindlen said today that the Logitech Revue is part of the company’s strategy to get Google TV in consumers’ hands, but not anything that will generate huge revenue by itself. In fact, he’d even be open to ditching the box altogether at some point and solely providing peripherals. From the earnings call, as transcribed by Seeking Alpha:

“(W)e may not be in the box business in the future. We haven’t made that strategic decision at this point. What we’re trying to do is, we want to see the box out there, the companion box is what I’m referring to, so that a standard consumer experience is established in the marketplace. And so we have a vested interest to see that happen.”


Related content on GigaOm Pro: TV Apps: Evolution from Novelty to Mainstream (subscription required)

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