Logitech Acquires Slim Devices

Logitech International, the Swiss computer'n'communications peripherals manufacturer, announced on October 19 that it had acquired Slim Devices, Inc., the home-network-music-systems pioneer that manufactures the Squeezebox and Transporter.

According to the Logitech press release, the purchase price was "$20 million in cash, plus a possible performance-based payment, tied to reaching certain future revenue targets."

Slim Devices was founded in 2001 by Sean Adams, later joined by chief technology officer Dean Blackketter. Slim Devices has been dedicated to open-source product development, which has allowed it to improve its Slimserver and Squeezeserver technologies rapidly through the contributions of a dedicated community of enthusiasts. When I interviewed Patrick Cosson, Slim Devices' vice president in charge of sales and marketing, about the high-end Transporter, he observed that the open-source community gave Slim Devices a "development staff that is larger than that of Microsoft or any of the industry giants." The flip side of that is that the open-source community that has contributed to Slim Devices' product development feels proprietary about the company.

Many of those community members expressed concerns on the Slim Devices Forums pages that the Logitech acquisition might alter Slim Devices' design ethos. Like Polk Audio, which held a frank discussion of the repercussions and ramifications of its acquisition by Directed Electronics on its own bulletin board, Slim Devices took its case to its Forums.

Adams himself announced the acquisition on the day it broke, and he quickly brought in Junien Labrousse, Logitech's senior vice-president of the entertainment and communication business unit, to address the Forum's concerns. Logitech, Labrousse explained, understood the centrality of the computer and digital audio to contemporary consumers, and saw Slim Devices as extending its reach into that realm. Acquiring Slim Devices, he maintained, was a strategy that Logitech saw as a long-term investment. In fact, Logitech's press release dryly reports, "While Logitech views the long-term potential of the acquisition to be very promising, the impact of the acquisition on Logitech's current fiscal year is not expected to be material."

Stereophile caught up with Adams and Labrousse during a day the two spent answering questions from all over the media world. I asked Adams about the reaction of the Slim Devices Forum members. "A lot of those people have followed Slim Devices since I was soldering stuff together in my garage. They're concerned that we've gone corporate. None of that will happen, but I understand that they're concerned."

Labrousse added, "It will be our role at Logitech to see that this ownership that people feel in the company remains—and we will continue to work like that. Logitech has always been innovative and attentive to our consumers.

"Acquiring Slim Devices fits perfectly with our strategy to go after the living room. We've developed several product lines in that direction." (Labrousse was referring to Logitech's acquisition of remote manufacturer Harmony and its launch of the Wireless DJ remote.)

Adams spoke of the synergy Logitech brings to Slim Devices: "We built the business on a shoestring and did everything incrementally along the way, so we've never been able to ramp up new products or get them into established retail channels. The big thing Logitech brings us is shelf space and the ability to get stuff out there."

Labrousse: "The company was run on a shoestring, but we were very impressed with what sound business principles it was run on. We're quite choosy about acquisitions—Slim Devices is only our fourth one in over 10 years. We're really excited about Slim Devices' status as high-end audio products, which is certainly where we want to go. We offer high-end products for the PC, but if you're serious about entering the living room, you must have a high-end approach. "

Adams: "You know, we've had a lot of venture capitalists approach us, but until we spoke to Logitech, none of them seemed to 'get' what we wanted to do. Logitech offers us growth, of course, but seeing how Logitech enhanced Harmony when it acquired it was eye-opening. Not only did build-quality improve, but Harmony very rapidly became available in over 100 countries."

"That's what it's really about," Labrousse concurred. "Slim Devices has a strong product and we can help extend the company's reach."