Well, thanks everybody for coming to the Logitech Investor and the Analyst Day. The press release, as well as a live webcast of these presentations, is available online on the investor relations page of our website, logitech.com. As is customary, I'm going to have to go through the long forward-looking statements, and it's kind of boring, so just bear with me here. During the course of these presentations, we may make forward-looking statements, including forward-looking statements with respect to future operating results that are being made under the safe harbor of the Securities Litigation Act of 1995. The forward-looking statements involve risk and uncertainties that could cause actual results to differ materially from those anticipated in these statements. Factors that could cause actual results to differ materially include those set forth in Logitech's quarterly report on Form 10-Q for the quarter ended December 31, 2017, and subsequent filings.
The company undertakes no obligation to provide or revise any forward-looking statements as a result of the new developments or otherwise. Please note that today's presentations will include results reported on both a GAAP and a non-GAAP basis. Non-GAAP reporting is provided to help you better understand our business. However, non-GAAP financial results are not meant to be considered in isolation from or in substitute for or superior to GAAP results. Non-GAAP measures have inherent limitations and should be used only in conjunction with Logitech's consolidated financial statements prepared in accordance with GAAP. Our earnings press release includes a table detailing the non-GAAP measures, together with the corresponding GAAP numbers and reconciliation to GAAP. This information is also posted on our investor relations website. We encourage listeners and visitors to review these items.
Unless otherwise noted, comparisons between periods are year-over-year and in constant currency, and all reported results and updated outlook are focused on continuing operations and do not include the performance of Lifesize, which is reported under discontinued operations. We're almost done, so just bear with me. These presentations are being recorded and will be available for replay on the investor relations page of the Logitech website, and we're pretty much done. With us today in Zurich are Bracken Darrell, our President and CEO, Vincent Pilette, CFO, and Urooj Nin, Head of Keyboards, Scott Wharton, Head of Video Collaboration, and Ujesh Desai, Head of Gaming. With that, let me turn the presentation over to Bracken.
That concludes our presentation. Thanks for coming. I have to say, Ben, I'm really disappointed in you. Don't take it personally, but there is no better application for this, or this, the Spotlight feature. First of all, thanks a lot for coming again. It's so exciting to be here every year. As we were getting ready for this year, Vincent and I were thinking about the fact that it's been five years. It's almost five years for him, a little over five years for me, and we've got a big group here. Guarino, this is Guarino. Where's Guarino? He's somewhere. I know he's here. Oh, he's hiding over there. This is 20 years for Guarino.
It's been an exciting five years, and what I want to do is just do a little bit of setup, talk a lot about where we've been, what's our story been so far, then we'll give you a few glimpses into where we're going, and we'll certainly get into the numbers, which most of you are waiting for. We'll make you wait for Vincent for that. Let me start by what you know. You know that Logitech really started by growing on the back of the PC. As the PC grew from, in 1981, at our birth, all the way through 1998, when Guarino arrived, all the way through 2008, the PC grew. We first entered with mice, then we entered with keyboards, then we surrounded the PC with more and more devices. We had three different ways to grow.
We could grow because the markets were growing. We could grow because we could innovate, and that's always been the hallmark of the company, or we could grow because we could enter new categories, and so that growth curve continued for a very long time. When we arrived in 2013, 2012, 2013, we obviously needed to change our approach. The PC had stopped growing. We kept innovating. The PC had stopped growing. We had stopped growing. We'd actually started to decline, and we needed a new approach. Hopefully, most of you in this room will know that this trees, plants, and seeds analogy is the way we looked at the company back then.
We looked at taking resources away from the tree, which was our PC peripherals business, and investing in new fast-growing categories, which we call plants, and starting to build new potential categories, which we called seeds. This was the approach we used starting in about 2013, and we've applied this pretty consistently all the way through today. On the way there, it's not enough to just say we're going to grow through trees, plants, and seeds, or we're going to change our company through trees, plants, and seeds. We needed a new PC. Luckily, we didn't need to create it. Somebody else did, and it's called the cloud. I'm going to go through why the cloud is our PC for a second. Most of you know the story, which is this. I start with the most counterintuitive category.
Why is our gaming business, which is a PC peripherals business, why is that a cloud-based business? Because the way PC gaming works is essentially when you're playing a PC game, and I was just talking to several of you about this, you're not actually playing with the device in front of you. You're bouncing off the device in front of you, and you're playing on the cloud, and the cloud is a server or a set of servers in different parts of the world, and other people are doing the same thing. That enables you or the gamer to play with- Not just a few, not just people near them, but thousands and tens of thousands and hundreds of thousands of people at the same time.
It also enables the gamer to be able to get on every time and have the game be updated without them even realizing. It's constantly new and refreshed. That's true in gaming. What we do in gaming is we create a mouse, a keyboard, a headset that enables you to play cloud-based gaming. If it sounds a little like PC gaming, let me go to the next one. This is not a PC at all. When we got into Bluetooth speakers four years ago, the Bluetooth speaker business, a lot of people thought of it as a phone accessory, and it is. Because you would go out, you'd play music, and you could essentially listen to the music that was on your phone, on the Bluetooth speaker.
The reality is, the growth of that business and so many others is driven off the cloud because companies like Spotify, that are streaming music, they're bouncing it off your phone, but you're playing it on your device, so you're actually listening to music coming almost directly from the cloud. We'll go to video conferencing. Video conferencing is probably the most obvious version of the future, which is when you walk into a conference room, or when you walked into a conference room, 10 years ago, five years ago, you sat down and essentially there was a PC somewhere in the wall, the equivalent of a big PC somewhere in the wall.
There was infrastructure in the building, and that infrastructure managed a point-to-point contact with another place that had an infrastructure in its wall, and you had a very high-quality video experience going point to point through the hardware that was on the building. That's now moved up to the cloud. When it moved up to the cloud, it did a lot of things. It made it so that you didn't need proprietary equipment. It made it so that it was always updated. It made it so it was accessible to many more people, that you could literally go into an internet link, click, and be in a video conference, which we all know by now. We take it for granted. What we've done there is, obviously, we create equipment that enables those video conferencing services.
We've become-- and I won't go on and on, but the point here is we've become not a-- we're not surrounding the PC, we're enabling cloud services. There will be more and more and more cloud services as time goes on. That is the fundamental root of our strategy. The result of that change, which is the change from reallocating R&D resources especially into new businesses and adopting a strategy that's not just surrounding a PC, although we're not letting up on that because it's still good, but actually enabling cloud services, has been this result. When we started five years ago, the first year, people now joke because I was in a conference not long ago, and I said, "When I started my first year with Bracken, I immediately made a big impact.
I made things worse." I did, I guess, because we declined 7% that first year, and only about 20% of our business was what we would call strategic growth. Not PC peripherals, but really strategic growth businesses. Our operating income was a pretty low $67 million. Roll through five years, and things are different. Obviously, this year we've guided at 12%-14% growth. We grew 2% the second year, and Vincent's going to talk about kind of the stages of our renovation of Logitech. In that early stage, we grew 2% the first year, we grew 4% the second year, we grew 9% the third year, we grew 15% last year. We've guided at 12%-14% this year.
Strategic growth, as we entered these cloud service businesses like video conferencing and accelerated in gaming, the portion of our business that was the old PC peripheral business, and I'll repeat, which is still a good business, has gone from that has shrunk. The part that's really the strategic growth future has grown. It's gone from 20% of our business as the strategic growth research to 60% of our business. Obviously, our profit, at the same time, at the end of this year, will have almost quadrupled, or will have quadrupled. It's been quite a good story. What I want to do is just remind you how we got there, because how we got here is how we'll go where we're going to go next. First of all, we talked at the last couple of these about capabilities.
As we're transforming our portfolio and as we're innovating in our products and experiences, we're also always building capability. We're building capability so we can build future businesses and keep innovating in the existing ones. You'll notice if you remember this slide from before, and we showed it at last year's Analyst & Investor Day, you'll notice five capabilities there. Operations is the bedrock, I'm not going to talk about that today. The headline is, in operations, we have something unique. The unique thing we have is we sit in a sweet spot. We're not so small that we can't afford our own manufacturing, we're not so big that we should just not worry about it because we can manage the really big manufacturers in Asia.
We're at this sweet spot where we can make our own things when we need to, we do, we can take on very difficult challenges, boy, we do, we can be different. We can also leverage that manufacturing operation to manage our own costs, to have better costs coming in on the products we don't manufacture. It's really a sweet spot. It's something we protect and we love. The other four capabilities are design, I'm going to talk about design in a minute, engineering, which I'll talk about, go-to-market, marketing, and the one that we've never talked about as a capability, because in a way it's not a capability, it's an attribute of the company, is our culture. I want to spend a few minutes on it today.
This time, and I know my engineering team would be excited that I've done it this time, I've actually combined design and engineering. Because design and engineering are actually the innovation engine of this company. We've always been an engineering company. We'll always be an engineering company. We're changing the kind of engineering we're doing. We're more than just hardware now. We're becoming a software engineering company, too. Today, we have software engineering leaders in every part of our business. The number of engineers we're adding in software dwarfs the number we're adding in hardware. Design and engineering come together, and they're creating for us a different point of view. That point of view is we are moving from just products to experience. That might sound like a subtle move, but it's not.
The way we're doing that is, there's no doubt that design is playing an incredibly important role here. First, we've not only moved from hardware only to hardware plus software, and you're going to get a little taste of that today in a couple of cases. We've also insourced our design operation. Today, we do almost all of the design that you see inside the company. If you looked six years ago, we did all of the design we did outside the company. That is a huge transition. We now have inside our company, a design firm that would be an incredibly successful and competitive design firm relative to the best design firms you could think of if it were independent of our company. But we employ it 100% into our own business.
The results are not only showing in our market shares, in our financial performance, but we're also getting awards. Last night was the Academy Awards in the U.S., the Oscars, the movie industry's top of the top. Honestly, awards don't really matter. But once a year, I like to show how we did in our Academy Awards. This is how we did in the last few years. We've won 100 awards in the last four years in our version of the Academy Awards, 50 of them last year alone. If that sounds like it's accelerating, it's because it is. The other thing I'll point out is if you look across, and this is obviously not all the products that won awards, it's across almost every category in our company.
We're not just winning in one category or two categories, we're winning across almost all of our categories, and we're winning across almost every country, every award company or organization that puts them out. We're trying to think of some way to figure out how to numerically, since many of you in the room are quants, I'm kind of a quant, too. Vincent's a quant. How do we quantify awards? How do you quantify the value beyond the fact that we got a lot? That's good. I asked Ben, I said, "Ben, I want to understand awards per revenue dollar, and I want to be able to compare it to everybody else." A, B, C, D, E, we obviously didn't name names. The companies that we don't necessarily compete with, but we look at as really top design companies.
Obviously, A is beating B, and B and C are neck and neck. This is us now. We're actually, we've moved beyond kind of the pack, and now from an award standpoint, it's consistent with our performance, which is also above the pack. We're about 70% higher in design awards per sales dollar relative to anybody else on this list. Finally, I'll stop with the design stuff. This just came out about 1 week ago. Fast Company, once a year, does a look at all the innovation companies around the world. They decided that we are one of the most innovative design companies in the world. We're in the top 10. That's in the world, not in the U.S., not in Switzerland, in the world. We don't believe we're anywhere close to where we need to be yet.
It's very early days for us in what we're trying to do as a design company. We are going to be a design company, but we are not one yet. A great design company would be a company that not only innovates and creates amazing experience in every category it delivers to users, whether they're consumers or businesses, but also runs its company using design principles and design thinking, rapid prototyping, constantly iterating, always improving. We're not there yet. We're not even close to there yet. We have so much work to do. We don't budget that way. We don't run meetings like this that way. We don't do so many things, but we can do better by doing that. We're at the very beginning of our design path, but we're already in the top 10, according to them. Next, we talked a little bit about marketing.
Marketing, when I started the company, one of the first things I did was get rid of marketing. The reason I got rid of marketing was because I didn't think our products deserved to be marketed yet. As I think I said to you last year, after a few years, I became very proud of our products. I thought, okay, now we're ready to market, but I don't want to do marketing the way a lot of companies do marketing because I don't like lying. I don't like stretching the truth. To me, that's what marketing had become. That's not a fair comment about the marketing industry. It's a fair comment about some of the experiences I saw along the way. I wanted a different kind of marketing. I wanted a marketing that's based on authenticity.
Authenticity, real things, real people, the real people behind the real products, behind the real brands. It starts with this. This is the real Logitech, the real Logitech from 1981. I'm not sure exactly when we created this I at the top, but it was a powerful thing inside the company. When I started the company, this was our brand. The problem with this was the consumers didn't recognize it as us. They saw that, and they didn't immediately say, "That's Logitech." We moved to this. We moved to this, it's still Logitech, but it's a modern, fresh logo. It's modern, fresh colors. If you drop the tech off of there, which you'll see if you walk out and look at those products on the tables, it's short, it's powerful, it's memorable, L-O-G-I.
Over the next 20 years, people will begin to associate that, just like the Nike swoosh or the Adidas stripes, with Logitech. That symbol will represent Logitech. We've refreshed Logitech, and that's the first step that we made in trying to reinvent the marketing or the way people think about the brand of Logitech. We didn't stop there because, as you know by now, we're not just going to be a one-brand company. That would limit our growth. We need to be able to enter new categories, and we need to enter new categories authentically. Logitech G is actually the invention of a new brand, but it borrows so strongly from Logitech that it's become Logitech to people under 25. The really cool thing is people under 25 think we're cool. People in this room think we're functional and really good, maybe, I hope.
The under 25, they're starting to think we're cool. They're starting to think we're cool because we're associated with the hottest sport in the world today, if you're under 25. It's not curling. Although curling's pretty hot. It's esports. Esports is the fastest-growing sport in the world. I'll repeat some statistics that always shock me. More people watch people play games online now than watch CNN, ESPN, Netflix, and Showtime combined. This is the hottest thing in the world, and that age group is all under 25. Ujesh is going to talk a little bit about what we're doing from a product standpoint to drive discontinuity into that market, leveraging what we've always been. Just like Logitech G leverages the Logitech name but brings us into new space. He's going to talk more about that in a minute.
A little over a year ago, we added Jaybird. Jaybird is a beautiful brand. Not enough people know about it yet, but it is beautiful. It's a brand that was born in the Rocky Mountains, and it's fun standing in Switzerland saying it. It was born in the mountains to inspire people to get out and experience the outdoors and be sportive, athletic. I personally am inspired by that, and it makes me feel good that we're in a business that does that. We could have bought that business and integrated it right into our offices, either in Lausanne or in Silicon Valley, but we chose not to do that. We left that office where it was. In fact, we moved the office, and we moved it further into the mountains.
When you walk out the back door of the office, you're on a running trail that goes right up into the mountains. We did that because we want authenticity. Authenticity, authenticity. Ultimate Ears, you know. This is a super fun brand. It's about being super sturdy, being waterproof, soap-proof, providing great acoustics, and leveraging a history, if you peel back the story, that comes from the best performers in the world standing on stage with something in their ears called Ultimate Ears PRO. This is another authentic, powerful brand. Of course, this year, we also added ASTRO. It's the newest member of the family. It's early days, but we're really excited about that business and that brand, too.
I'm going to go through another one of those capabilities, which we call go-to-market, or everybody calls go-to-market, which we rarely talk about at a meeting like this. I'm going to just touch on it this time, though, because there's been five years of amazing change in that field too, or in that capability too. When I started in the company, or when we started the company five years ago, we were about, I think that first year. It's hard to measure, by the way, because you've got companies doing retail and e-tail. But by our estimate, we were at about 89%, 90% retail five and a half, six years ago. Today, by our guesstimates, we're probably between 30% and 35%, so it's more than tripled the e-tail portion of our business. That won't surprise you.
What might surprise you, if you haven't heard me say it before, is that our China business, which is a very powerful business for us, is now 70% e-tail. 7, 0, not 17. When we started five and a half years ago, it was about 13%. That's enabled us and driven us to improve capability in marketing and going to market through e-tail at such a rapid pace that it's put us in a great position going forward to take the learnings we've had in China and apply them into the rest of the world. That's our game plan. The third area, which we didn't even have a single CHF or USD of sales in, was telco six years ago. Telco wasn't an obvious place for us to go.
It was the fact that we were entering these new plants and seeds that actually opened up the telco opportunity for us. The Bluetooth speaker business became a route into telco. We had talked about telco before. We'd tried the telco before, even with our keyboard covers, but we'd never penetrated telco till then. We're still at the very early days of opening up the telco opportunity, but it's already become a very significant part of our business from a go-to-market standpoint. Finally, B2B. Scott's going to talk about our video collaboration business, we've now got a good, strong first foot into the B2B space, and we like what we see. It's very comfortable. In the past, we've always sold to B2B, we sort of sold to B2B because the products kind of found their way there.
We didn't have a strategic priority of entering the B2B space. When we started the video conferencing business, we said, "Wow, we like what we see, how do we get in there and create a meaningful, sustainable, competitive business?" We've done it. Scott's going to talk to you more about it's a really exciting space. That won't be the end. It's probably hard for you off the top of your head to think what other channels might open up. It probably would have been a few years ago, too, and if I'd stood in this room before we entered some of these. We will enter new channels. There will be new opportunities for us. We're looking at them all the time, just like we're looking at acquisitions that can accelerate or differentiate what we're doing.
I told you I'd talk a little about culture, which I've never done here, at least not at any length. I wanted to because I'm super excited about where we've gotten to. Here, too. I debated what to put on this slide, after a discussion with Vincent and others, I decided the best way to describe this is we've kind of rediscovered our culture or rediscovered our soul. We didn't change our culture. I think if you talk to people inside the company, those who've been there less than 10 years, they feel like, "Wow, our culture's really changed." Those who've been here more than 10 years say, "Wow, we're getting back to what we used to be." Feels a lot closer to what we were when we started.
That I love, because it means that we've found a point of authenticity within our culture that we can leverage. What do I mean by that? Before I go to what I mean by that, here's where we were when we started. When Vincent and I started and others in the room started five years ago, our overall rating-- By the way, Glassdoor, how many people have ever heard of Glassdoor? Okay, more than I would have thought. Glassdoor, for those of you who don't know about it, is a company or website. Anybody can go on, you can go on today, you can rate the companies that you work for or worked for. People are doing it at a really fast clip now. They've got huge penetration. In the U.S., they're very big, and markets around the world are getting big.
They're the leader in this by far. In the early days, our overall rating on a one to five scale was a 2.7, which was way below average. Our culture and value, which is one of the attributes they rate, was well below average. Our recommend to a friend was sad, meaning only four out of 10 people would say, "If I were you, I'd go work for Logitech." The positive outlook for the company was gloomy, was not positive. People basically said, only one out of 10 people said, "Boy, this looks like it's going to be good in the future." It was an ugly place. Roll forward five years, this is the story. Our overall rating is 3.9. By the way, all these on the right are way above the averages.
3.9, we're approaching the best-in-class there, of the really big companies you talk about every day. Our culture and value scores have not surprisingly gone way up as we've rediscovered our soul. Our recommend to a friend, which is in a way the nicest one because it means that the people that I trust most, I would tell them, "Come work here." Almost four out of five people would recommend it to a friend. We have a positive outlook, a very positive outlook about the future of the company. How did we do that? There's no magic here. We basically tried to get back to being a small company and feeling like a small company, making sure that the leaders are accessible, flattening the organization so there's not so much distance between Vincent Pilette and the first-level accountant or me and anybody.
Trying to get rid of the bureaucracy as much as we possibly can. It's always a fight. We're always trying to hack out the bureaucracy, but we're trying never to have those stupid things that we all do when I always say, we collectively are much dumber than each of us individually, unless we work together in small teams. Then we can be really smart. We try very hard to be humble, yet we're a Swiss company. I lived long enough in Switzerland, and I've worked long enough in Switzerland to really admire the fact that there's a confidence and humility here in Switzerland that you really don't have very many other places in the world. It's in the DNA of Logitech if we don't let it get away. We try to cultivate that inside the company.
Maybe most important of all is to stay hungry. A few years of what other people think of as success can doom you if you're not careful. Always trying to find the next frontier, the next goal, the next strategy, the next thing that could take us to the next level is an obsession. Of course, willing to try new things. It's very easy to become risk-averse and stay risk-averse and to be afraid of the new and be afraid of failing. If you're afraid of failing, you're sure to fail in the long term. You'll probably be okay in the very short term. We're not short term. Where are we going next? We're going to give you a few drops of the story from here. It won't be me.
I hope that you'll smile a little bit on this slide, but we've cultivated three people to come up and talk next. They represent three businesses. One of our oldest businesses, actually our second oldest business, which is our keyboard business. It's an old business, but it is not an old product and an old experience, as you're going to see. One of our newest businesses, which is video collaboration, which really is a new business. It's a new market, a new category, new everything, new opportunity. Our coolest business, which is our gaming business. It is super cool. With that, I'm going to hand this off to our oldest business and Urooj.
Bracken, thanks. Thank you very much. Yes, I'm representing our oldest business, so the core Creativity & Productivity part, mice and keyboards. I hope, and I think I'm going to show you stuff which is also new and which is also cool. I'll let you be the judge of it. What I'm going to do is talk about one product, which in many ways, it kind of can be used as an example of some of the capabilities that Bracken described earlier. I'm going to go through a few elements of it. We'll talk about each of the capabilities. This product is a new keyboard called Logitech Craft. We launched it in September. You can take a look at it. We launched it in September last year. It's an advanced keyboard. It's at the flagship end of our range.
The flagship keyboard, of course, it's an advanced piece of hardware. Of course, it has got our best typing. This year, this month, we're going to celebrate 20 years of leading wireless keyboards at Logitech, and all of that expertise is put into this as a typing machine. It's also got our best illumination. It's got backlighting that lights up as you approach your hands, and it fades as you take your hands away. It adjusts to the ambient light in a room. Super advanced in terms of its lighting. In terms of its build quality, it's the best that we've made. It's got an aluminum piece of backbone, a spine. The materials, the finishing, the construction of it is the best that we could do. It's got a new physical tool that allows you to interact in an entirely new way with a computer.
It is a beautiful piece of hardware. Let's see it in action. This is an artist that we worked with in Poland. If he's able to work faster, more precisely, and with a greater sense of focus and control on his work, it's not because of this great piece of hardware. It's because above all, Craft is a stunning piece of software. I'm going to describe the software a little bit more. This capability of engineering and designing software allows us to take hardware and then to create an entirely new experience on top of it. The Craft software is built into the operating system, whether you're using Windows or Mac. It's deeply integrated into the main applications that people use. Creativity applications, the Adobe Creative Cloud, names that you know, like Photoshop, InDesign, Illustrator, Lightroom.
The Microsoft Office Suite, PowerPoint, Word, Excel, many other apps. How it works, it's beautifully understated. There's so much going on under the hood in terms of engineering complexity that we've managed to overcome. It's designed to be simple. It's an engineering challenge that we've undertook. What happens is when I touch the crown, the keyboard will know what I'm trying to do, what I'm trying to achieve. For example, if I'm in Photoshop, if I touch the crown, this overlay appears on the screen. If I've selected the paintbrush tool, that overlay will be brush size, brush density, brush opacity.
I can just change it with the crown to where I want without having to manage the different menus and sliders and other things that would take my eyes off the work that I'm doing and give me lots of mouse mileage and other things. It's a new way of working. Let me take some examples which might also be more familiar to you from Excel. I guess many of you are heavy Excel users, as am I. If I'm in Excel, I select a single cell within Excel. If I touch the crown, I touch it knows it's been touched. This overlay will show horizontal scrolling, so I can scroll horizontally along a row. If I tap it will go to zoom. I can zoom in and out on a spreadsheet.
If I select a series of cells, it will show something different. If I select cells A1 to D5, it will know that I probably want to create a chart. There, as I touch it and I twist, straight away, I can create a bar chart, pie chart, and various graphs. It knows what I want to do. It's contextual. That's a huge engineering challenge that we overcame. It also integrates with the hardware. Sometimes I want smooth scrolling as I move the crown. I want it to be able to smooth quickly along a row when I'm on Excel. I don't want it to go click to click across all of the cells. If I click on the tabs of Excel, and if I want to navigate across different tabs, then I want more precision.
The keyboard will actually physically change to give me click-to-click precision because it knows what I'm trying to achieve with the computer. The software knows what I'm doing. It's synchronized with the hardware. It is deeply customizable, as are most of our mice and keyboards. We know that people love to be able to tweak and customize the product. Via Logitech Options, which is our desktop software, which is used by millions of people for our mice and keyboards, you can customize what the buttons do. You can customize how the crown works. There's a software developer kit, an SDK, which we made available also to the developer community just last week, which allows people to write how they want the crown to integrate with their applications. It's great for them.
It's also great for us because it means it's a very scalable solution as others develop the integrations. Finally, it's got something called Logitech Flow, which some of you may know. This allows cross-computer control. What I mean by that is that if you use, let's say, an MX Master mouse and Craft, and if you've got two computers, you don't need to have two mice and two keyboards. I can have a Mac and a PC at home, and as I use my mouse, I can move the cursor. I can even copy some text on my Mac, move the cursor, and the cursor will appear on my PC, and I can paste the text. The keyboard will follow.
The light on my keyboard will go from connected to my Mac to connected to my PC, and I can have the functions of Craft on both of them. This hardware, which is enhanced by this really complex but stunningly simple to the user software, enables an experience that you just couldn't have before and that nobody else can deliver. We're getting rewarded for it. We're getting rewarded in terms of awards. We just, a couple of weeks ago, got the iF DESIGN AWARD for the Craft hardware and software together. At CES, which I'm sure many of you know, the Consumer Electronics Show, massive show, beginning of January in Las Vegas every year, where they give awards for hardware, but they also give awards to software-specific companies, app builders, and enterprise software companies.
We got an award for the Craft hardware, we also got an award for the Flow software there, which I think shows how software design and engineering is now a core capability within Logitech that we're very proud of. Craft also allows us to exercise one of the other capabilities and one of the other muscles that we've got within Logitech, and that's marketing, as Bracken described earlier. Why? With Craft, we could talk to a new bunch of people. We could expand our reach to the creative community. The creative community, many of us are creative in some way. The newer generation under 30 would all describe themselves as creative. Here we're really speaking about people who are heavy users of the Adobe Creative Cloud. These people already use our mice.
On the keyboard side, we haven't really addressed them in the last few years. We did. We also spoke to them, not directly through Logitech, we spoke to them through artists, people that they follow and people that they respect. We worked with a bunch of artists. These are some of the artists that we worked with in Europe and in the U.S. In Asia, we had local artists that we worked with in China and in Japan. They brought Craft into their lives. They used it, they integrated it into their workflow. They loved it, they told their communities and they told their fans. This word has spread across the creative community. Jessica Bellamy, the last one, is interesting because she's actually an artist in residence at Adobe.
She took Craft and she used it and she made a video, and she closed her video by saying, "This is a game changer. It's insane. I can't imagine how fast I'm going to be able to work." Her words. I couldn't have said them better myself. We used these artists, and we also took them to another place where the creative community goes for inspiration, and that's Adobe MAX. Adobe is the go-to tool for the creative community. Photoshop, InDesign, Illustrator, these are the names that you know, and these are the tools that people spend eight hours a day creating in. They go to the creativity conference held in Las Vegas in October. In Tokyo, it was held in November.
It was about 25,000 professional and amateur creatives who are all going to find out what's new, how can I get tips, tricks, hardware to improve how I work. We interacted with them there. We also featured pretty prominently by Adobe in their blog in advance of the show. The principal creative director of Adobe, in fact, he has a masterclass, a very well-known guy in the field called Russell Brown. He has a masterclass on Photoshop and Illustrator that he brings people to show them the best ways and the newest ways to use the applications. He actually used Craft at every single one of the workstations for the people who came to his masterclass. It was a great honor for us.
It was also a place where there was many reviewers, many journalists, many people that we could interact with. The feedback was pretty unanimous. The most impressive piece of hardware I tried from the hundreds on display at Adobe MAX, Logitech Craft. The best input device at Adobe MAX, Logitech Craft. Really a great response and something that we're investing quite a lot behind this relationship with the creative community. The other thing about the marketing of this product that's cool is that this campaign, all of the images, the video, all of these assets, these were conceived and created, many of them produced entirely in-house by our in-house creative team.
The people who shop today online or in-store for this product, they come into contact with work that was done in-house, not by an external agency, but by the wonderful people that we've got in our internal team. Craft is a nice story. It's a great story to show those two capabilities. It wouldn't be such a nice story if it wasn't also a profitable story. I want to show you how we can take an advanced piece of hardware, layer on top of it this stunning piece of software, and still make a profitable product. I'll do it by focusing on one part of the product in particular, and that is the metal bar at the top of the product. Okay?
This is an aluminum bar. I want to talk to you about how we focus on ingredients and how we act early on designing for cost. Anybody who was in New York last year at this event or who saw the presentations from that would have seen Joe Sullivan, our operations leader, talking about how we moved our focus for cost from historically where we launch a product and then afterwards focus on how we could manage the cost to how we can advance in advance of launching, how we can design for cost. In the case of Craft, many other products, we're actually moving way upstream and years in advance, we're beginning the process of designing for cost. About five years ago, we said we need to be able to integrate metal into our products.
We're in people's homes and talking to consumers every single day. We know the consumers expect it at the high end. We also know that it offers unique benefits, that the sturdiness and the build of Craft is because of that metal backbone that it's got. The Spotlight Presentation Remote that I'm holding, the use of aluminum here means that it stays cool in my hand, even if it is a stressful presentation environment. Metal has got a benefit. We needed it. We put together a team which was multifunctional, multi-site, and who worked over multiple years to become experts in the material science of metal, in how to master the processes required to develop metal parts, to qualify the right suppliers, to design for manufacture, but also design for optimizing the production yields. Better yields, lower costs.
The result was that we have an extremely complex part. It doesn't look complex, but it's extremely complex. There's six steps from when we stamp the aluminum to when it's finally anodized. We can deliver that part and make it ready for assembly at about 60% saving versus the estimate that we would've had four years ago. With that, I think Logitech Craft and all of the other products that we've got in this high-end Creativity & Productivity space, they really do showcase, of course, our hardware capabilities that you know really well, but also the marketing, design, engineering capabilities, software engineering capabilities, and then our ability to design for cost. With that, I'm going to pass you on to Scott Wharton, who's going to talk about our new big business Video Collaboration.
Thank you. Thanks, Art. Good morning, everybody. As Art said, I'd like to talk to you about a Video Collaboration business. Many of you probably know for Logitech that we're a big player in webcams, and we're actually number 1 in the world for webcams. As the newest business, we've been around for about six years, and the business really started out of an observation that a lot of our customers, instead of taking a very expensive traditional video conferencing unit, were actually taking a $100 webcam, or in some cases lower cost, and sticking it into a conference room. It's a really interesting observation.
We looked at that and said, "a lot of our customers wanted something more, not just for individuals that they're using webcams, but they want it in a conference room." After six years, we're actually in a very short period, we're now number 1 in the world for conference room systems. That's been a major accomplishment that we've done in a very short period of time. Part of how we've done that is instead of trying to tackle the entire business ourselves, as Bracken said, we've worked with cloud providers, like the other parts of Logitech, to be able to roll out equipment with the leading cloud video solutions. We also follow a lot of the Logitech script that we use a plug-and-play approach, so kind of like our keyboards and mice. They're USB devices. They're not really complicated. They're easy to use.
We also maintain an enterprise-class capability, but at a mainstream price. That's what Logitech is really good at. We know how to make things in very high volume with high quality at a reasonable price. If you look at the overall market for collaboration and workspaces, it's really changed a lot in the last five to 10 years. Specifically for video conferencing, it used to be how it rolled out, you had these dedicated high rooms. Usually, they were boardrooms or rooms dedicated to video. You had to schedule everyone to get together because it was kind of hard, and you used things that were mostly internal. As Bracken said, usually, they were deployed within the company, which made it very hard to make communication outside. They were designed really specifically for that room, so they were hard to really apply to different places.
The world is changing a lot, what I would say is it's not only in Silicon Valley. We see it at big companies, small companies, in Europe, in Asia, and in the U.S. There's a whole movement of it, as I think many of you know, people moving from dedicated conference rooms and offices to huddle spaces where people are working more in an open environment. People want to be able to communicate anywhere as our businesses become more global. We need to not only communicate with the people that are in our own office, but we need to communicate with people all around the world in different time zones. Voice is just not good enough anymore, especially as the millennials start entering the workplace.
I had an experience when I first started working where I was using a Mac, and it had a graphic user interface, then I started my first job, and they gave me this computer, and they said, "Look at this great computer. It's got WordPerfect on it with DOS." I'm like, "What the hell is this?" I think millennials are doing the same thing now. They're starting out with video conferencing. They're so used to it, then they go into the workplace. If you're giving them audio only, they're going to revolt. They just don't want to work in that way anymore. As Bracken said, everything is moving to the cloud. As things are moving to the cloud, people really want to be able to do plug and play.
They don't want the old complexity of video and the way they communicated. They want it to be easy to use. They want to take the same kind of capability that all of us know how to use on our desktop and move it into conference rooms. If you look at the market for video conferencing, as I said, it used to be very focused on the top of the pyramid, these high-end rooms, then a little bit of deployment in huddle rooms. Where it's changing a lot, as huddle rooms are becoming more prevalent and actually a much bigger opportunity, instead of us focusing on the 10 million rooms that are at the top of the pyramid, we're really focused on the bigger opportunity, the 50 million rooms.
In many cases, we're not actually competing with the traditional players because we're opening up a whole new market and a whole new opportunity for the way people communicate. We have the ability to go back and work for those big rooms, we're really focused on expanding the market, not just replacing what already exists. Part of what's driving this market is not just more conference rooms and the way people are working, it's the actual cloud services. These are some stats from the leading cloud providers, people like Microsoft with Skype for Business or Zoom. If you see what they've done over the last year-over-year, they've grown at over 100%. There's always been this question of are people using video conferencing? Do they like it? I think these numbers show, yes, absolutely. It's more than doubling year-over-year.
That trend has continued to 2017 and 2018, that more and more people around the world are using video as part of their workflow. Even having said that, looking at the growth rate of video, we're just at the very beginning. Video conferencing has been around for 30 years, and yet it's only penetrated 2.5% of all conference rooms around the world. The opportunity for us and in front of us is to go after all of those rooms, the 97.5%, and maybe they've got a display, they've got a telephone, but they don't have video yet, but they will. In fact, as an analogy, if you looked at where the PC industry was 40 years ago, Bill Gates famously said that he wanted to put a computer on every desk at home and at work. At the time, people said, "What?
That crappy thing, people are going to put it on every desk? Nobody wants to do that. They're not that great." We know he was right now, that people not only have a computer on every desk, but we all have computers in our pockets. The analogy for Logitech is we want to put video conferencing in every conference room worldwide. You shouldn't have to think about going into a room and saying, "Do they have video in there or not?" It just should be everywhere. In fact, part of the way we think about it, and Bracken likes to say that when you're in a conference room and there's a table designed for eight people, we never walk into a room and see four chairs, and then you ask, "What's going on?
Why are there four chairs?" They go, "Well, we just don't have the budget for the chairs." Nobody ever says that. Video is going to do the same thing. People won't say, "I don't have the budget anymore." It's now at a very reasonable price of EUR 1,000 ±. Video will be pervasive. It will be everywhere, and I'm completely confident that it won't take 40 years for us to get there. How do we win in this business? Really, it's four very simple things. Like the rest of Logitech, we focus just on creating great products that people love. I would argue that in the business space, people are consumers, too. They love great products. They love great design.
Maybe the buyers are different, where you have an IT buyer, but the IT buyer doesn't want to buy something that people look at and say, "God, who put that in that room? This is really ugly." They want things that look great and perform at a great level. The second thing is we're not doing it all ourselves. We're doing it with partners. Instead of us having to convince people about video conferencing that they need to do that and going out and have to acquire customers, we work with big companies like Microsoft and Google and some of the other big players that are already going out and evangelize video conferencing and are driving cloud video conferencing everywhere into the business market.
We work really closely hand in hand with them, both in terms of integrating the products together, also in joint selling and marketing. It's not only us doing it's doing it with them, we have a relatively lower cost acquisition than if we did it ourselves. Part of doing that really helps us create awareness, we don't have to do it ourselves. We do it with these big platform providers. Last but not least, it's a new market, you can't just do PR. You really need a combination of high-touch sales and marketing to reach customers, to talk to them, to really explain to them about what you're doing.
On the product side, what we've done is we've really looked at different rooms and said, "All right, instead of doing what the incumbents have done, which is take expensive products and make them cheaper and scale them down for smaller rooms, we've looked at every room organically and said, 'What do you need for a small room? Different requirements for a medium room.' Of course, large rooms, you might have different requirements in terms of being able to see everyone and hear them." I'll give you one example of what we did here. We launched about eight months ago, a product called Logitech MeetUp, and part of what we were trying to figure out is, what do you do for these new small rooms, these new huddle rooms?
Now, as I said, a lot of the traditional players, what they've done is they've taken their big, expensive products and they defeature them and put them into these rooms. What we found is that you really, in some ways, need to make it better for a small room. Many of you who've been on a video call in a small room have probably noticed that when you're looking out, actually, the people who are sitting at the front are cut off. Has this ever happened to any of you, where you just can't see them?
What we decided to do is, starting with a blank sheet of paper, we really needed to make sure that the camera, which in a traditional system would be very narrow for a boardroom, need to be super wide so that you can see everyone's sides, actually better than the expensive systems. Here's an example how we're showing the traditional system on the left-hand side, which could be 78 degrees or lower. You can't see the people in the front. They're cut off. Even 90 degrees on our webcams wouldn't cut it. We had to go to 120. That's actually the exact perfect amount that you want because 120 can see everyone at front, you don't want any wider than that because you would actually be on the side of the TV. You couldn't even see it anyway, it would be irrelevant.
As I said, we're engaged with lots of partners around the world, Microsoft, Zoom, Google, Cisco, and others, to tackle this market. This is really important, as I said, because we're not doing it ourselves. We work with the cloud video platforms. We work with people in the PC business as they're selling PCs that go with every video system. Even people in the traditional AV world who have to go out and design lighting and screens and other things, they want to work with Logitech to move to this new world where they love the idea of instead of selling five units of video conferencing, how about selling 1,000 and going out to the entire business. Part of what we're doing, and I think a big competitive advantage, is really focus on enterprise sales and being able to go out and touch the customer.
If you look at our approach, I would say that we're really in the sweet spot for what you want to be in the enterprise sales side. From a startup point of view, they really struggle so that they may come up with the product, but they're not going to be able to hire salespeople all around the world. On the other side, if you look at the big companies, the conglomerates, the tech generalists, they have salespeople that cover such a wide range of portfolio things. They don't really know how to sell collaboration, and in many cases, they don't want to because it's a relatively small market. They want to sell the big things like routers and other things. They don't necessarily want to tackle communications.
We're in this sweet spot where now we have a global team of specialists dedicated to selling communications, and we're arguably in most of the major countries and cities all over the world. We'll keep expanding that on a prudent basis, because what we found is every time you add a new salesperson, we add more sales. We'd love to be able to keep adding more, but we're going to do it in a prudent and methodical way. We feel really good about the fact that we now have this global sales force. Why is that important? It's important because in a mature market, people may know your product, they may go out and ask for it. In a market that's early like this, probably many of you didn't know that we were number one in this space, didn't know about our products.
The way to sell to those people is you still need to have human-to-human contact where you talk to people. It allows us to both drive the sales so that we're not allowing competitors in, but also to let people know what we're doing and drive the sales that way. The proof is in the results of what we've done over the last six years. We've grown from a relatively small amount where we started entering in with small systems to now almost a $200 million run rate. We've roughly doubled the business since I've been here two years ago at the last AID, and the state of the business is really strong.
We have great partnerships with the leading platform providers. We've expanded our portfolio products from the early days of our little eyeball and stick, the BCC950, to a bunch of products that really cover all the different conference rooms. Now we can say we can sell you a small room, a medium room, a large room, and other things. Summing up, over a relatively short period as one of our newest businesses, we've become the market leader in this space. We've done it partly by having great products that have completely changed the market from being very high-end and working really well, but targeted a very small sliver of the market, to something that can be in every conference room that anybody who knows how to use video conferencing can use in any place.
We've also done it by partnering with the key players. We haven't done it ourselves. We work with Microsoft and others to go out and show people how they can have great video conferencing at a very affordable price. Last but not least, high-touch sales and marketing all around the world where we can sell globally, where when you're selling through a large company, they don't want to hear that you can only sell in Switzerland or the U.S. They want to put video conferencing everywhere in all their countries. This is a real strength of Logitech, that we can go to 100 countries, sell locally, support locally, which very few companies can do. With that, I'll move on to the coolest for you, Rajesh. Thanks very much.
Thanks, Bracken.
See you.
The gaming market is cool. I'm definitely not cool. I'll just admit that first. I'm the biggest nerd you'll find. My name is Rajesh. I run the gaming business here at Logitech. I've been with the company for little over almost four years, really excited. I'm going to quickly talk through what is our strategy for 2018, what are we focused on. With that, we'll get started. There's three main areas that we focus on. We keep it very simple. One is we're going to continue to develop superior products and experiences. The way we do that, as Bracken already talked about, it's all the way through design and engineering, through manufacturing. We sit down and we get to know the gamers. In fact, many of them work on our team.
Our team is comprised of a bunch of different gamers that love to play video games, myself included. I've been lucky enough to been able to make a career out of playing video games. We sit down and we actually go into gamers' houses to see how they play, to understand what they need. That's how we focus on the superior products and the experiences. That leads us to what I talk about next, which is wireless. I'm actually going to a little bit of detail on what we've done in the wireless space. If you think of console gaming, they've had wireless controllers for a while now, wireless headsets. This is not the case in PC gaming because there have been some limitations. I'm going to talk about that.
As a company, Logitech does a really good job of wireless products, as you heard Art talk earlier. Even in the workspace, our wireless products are used everywhere. We wanted to take that expertise and leverage that and bring that and solve a fundamental problem in PC gaming, and it's how do we bring wireless to PC gaming? I'll talk about that. Last is the choice of pros. Bracken mentioned esports is a brand-new sport. It's a sport for young kids. My daughter's 12 years old. All she does is watch Twitch and YouTube. Those are her favorite athletes. She does look at some traditional sports, but esports is just as important to her. We partner with these players just like a Nike or an Adidas would in developing our products, because if it's good enough for them, it's good enough for everyone.
With that, why don't we start by talking about wireless? As Bracken and Vincent have mentioned in the past, if there is an area that we believe we can add real value, then we're not afraid to take our gross profit dollars and invest them into those areas. Wireless is one of those areas, as I mentioned, because we understood that we wanted to make PC gaming better, wireless is an area that we had to invest. What I'm going to talk about, though, is it was not an easy solution, and it was a multidisciplinary thing that we had to go embark on. It involved the business group, it involved design, it involved engineering, all the way through manufacturing and marketing. It wasn't just one area. We had to solve multiple things, and I'll talk about that. With that, why don't we jump in?
The first thing we did, as I mentioned, is you have to put yourself, you have to have empathy with the customer. We had to understand what are they feeling. The first thing they told us is, "I'm never going to get a wireless product. I'm worried about lag." If you think about it, gaming is very different than just standard office use. You have to have the highest performance. The difference in milliseconds matters between winning and losing. They didn't want to have any lag. This is something we had to solve. We had to make sure our wireless products were as good as a wired product, and in some cases, if we could, make them even faster than the competition's wired products. That's the first thing we had to solve.
The second thing we had to solve was even if we were able to solve lag, they would worry about their battery dying. They'd be in the middle of a raid with their friends. They didn't want to let them down and have their battery die. Battery life was something we had to solve, and if you go back to the first one where I just talked about, is for gaming, you needed higher performing products. Well, those higher performing components take more battery. That was a tough problem that we had to figure out how to solve. That said, when you talk to all of these gamers, even the pros themselves, they actually don't like cords because it limits their freedom. They were worried about latency more. What you'll see is they come up with their own wacky ways to kind of solve this.
In fact, this is a real product. This is not a joke. This is a product that they create called a mouse bungee. It's like a bungee cord for your mouse, and the whole idea is it moves the wire out of the way, and it's an attempt to make a wired mouse feel like a wired mouse. It completely fails. If you've ever seen anyone use this in a competition, the minute they get in the middle of the match, the thing tips over, it falls apart. It's just a total nuisance. This is an area that we just, solving it by simplifying it, this is not going to work. Here's another analogy that you can think of. If you go back, this was the original diving bell in the 1800s.
It was functional, it worked, you could go underwater, it really limited your mobility, right? Fast-forward today. This is what a modern diving suit looks like, right? You can now enjoy, whether it's for work or whether it's for play. If I look around, I'm sure most of you probably, if you're not using one today, you probably have a wireless mouse somewhere in your laptop bag for work. That's not the case for PC gaming because of all of those things that I talked about. That is what we fundamentally had to go solve. The way we solved it is there are three areas that we had to innovate. The first is what we call LIGHTSPEED. LIGHTSPEED was technology we created to address lag. The second area was POWERPLAY. POWERPLAY was technology we created to go after battery life.
How do we solve the battery life issue? Those are two solutions I'm going to talk about. The third is just as important, and it's not a linear solution. This is why I was showing that the problem to solve wireless is multifaceted, multi-dimensional. Here, we realized if we really wanted wireless to be available to the masses, we fundamentally had to design a brand-new gaming sensor. Because the gaming sensor that we use in our mouse is the most power-consuming component inside. That's the last thing we had to do. Let's start with talking about LIGHTSPEED. With LIGHTSPEED, what we did is we wanted to go after lag. Now, if you think about wireless, inherently, it is harder than wired, right? You have to encrypt the data, you have to decrypt the data.
We made sure we optimized that to make it as fast as possible. We couldn't stop there. We had to look at the entire pipeline. We measured things like click latency from the time the electrical impulse comes off the switch, goes through the USB microcontroller. We optimized that to make sure it was as fast as possible. We looked at our signal. We wanted to have an extremely robust signal, so we didn't have any drop-off. We also finally looked at perturbation. You can imagine interference. There's tons of modems, tons of cell phones. How do you fight off interference? We wanted to make sure we looked at that and we had a very robust signal. You can imagine if you're a gamer playing at a professional tournament and you're on stage, there's 1,000s of people in the audience with their cell phone.
You don't want to have any interference that cause you to lose that shot or miss that shot, and it causes you $100,000s in prize money. Even if you're not a pro, think about a gamer that works in a dorm room or lives in a dorm room. The dorm room has tons of interference. That's something we really had to make sure we tested. Because for a gamer, the difference between winning and losing is measured in milliseconds. With that, I'll show you a quick video that shows how we tested for that. The picture you saw there was just one of the many anechoic chambers that we have around the world, and that's where we measure our wireless performance to ensure that even if you're in a LAN party with 1,500 to 2,000 people, that we have no interference whatsoever.
That's what we did. We created LIGHTSPEED, that solved the lag issue. The next thing we had to do is solve battery life, right? It doesn't matter if you have great performance. If your battery dies, it's useless. That's where we created POWERPLAY. What POWERPLAY does is we created a charging mat, and if you look at this charging mat in this exploded view, we created electromagnetic resonance technology. We use that to create an energy field on the top of the surface. We have this coin that we created that goes into your wireless mouse, and that coin harnesses that energy and uses that to charge the battery inside the mouse. We are the only vendor in the industry that's invented a technology like this.
What it allows you to do, it is charging the mouse while it's at rest, but also while it's at play, which is fundamentally different. If you look at what some of the competitors do, they use what's called Qi charging, which is, I'm sure you're all familiar with. You use that on your phone. You take your phone, you put it in one place, it charges overnight, you take it the next day. That's great for a phone, not really good if you're trying to play a video game. Right? You really want to be able to use your mouse while it's charging. That's what we've created here. There's another solution on the market that's called capacitive charging. There's a limitation to that as well. The capacitive charging solutions out there don't have a battery in their mouse. When you're using it on those pads, it charges.
The minute you take it off that mouse pad, it doesn't work anymore. You have to plug a wire into it, and it becomes a wired mouse. Kind of defeats the purpose. We are the only solution in the market where it's a wireless product. You can use it while at rest or while at play, and when you take it off and you use it on your laptop, it's fully charged. You come back, it's ready to go as well. That was LIGHTSPEED and POWERPLAY. The good news about that is we solved those solutions, but the problem was not everyone could afford that. The POWERPLAY charging mat is EUR 100. The POWERPLAY mouse is EUR 100. Someone like me could afford it. I think Bracken could get one.
If we wanted to take this out, and we wanted to go to the masses, we had to fundamentally invent something different, and that's how we came up with HERO. HERO is a brand-new gaming sensor that we created so that we could democratize wireless and make it available for everyone. Here's how we did it. Going back to 2013, we had a product called G700s. At the time, it had the ADNS-9800 sensor in it, highest performing, most power-efficient sensor on the market. That said, from an engineering standpoint and a design standpoint, we were not satisfied because that G700 mouse still wasn't as good as a wired solution. We invented some more. We came out with two new sensors, our HERO and our PMW3366. The HERO we used in our G602 mouse. At the time, once again, revolutionary.
It went from nine hours of battery life to 125 hours of battery life. Really, really efficient. The problem was it still wasn't as fast as a wired mouse. We said, "Okay, let's come out with PMW3366." We've solved the performance issue. PMW3366, amazing sensor, just as good as a wired mouse, but the battery life, again, was a problem. Only lasted 32 hours. We didn't solve this quadrant over here that was this magic space that we wanted to go after. That's what challenged us and caused us to invent HERO. 10x the power efficiency of the PMW3366 to get all the performance that you need, just as good as a wired mouse, but extremely efficient. We just introduced a brand-new gaming mouse we call our G603, and with that mouse, on two AA batteries, you now get 18 months of battery life.
What's better is the HERO sensor actually costs less than the PMW3366. It improves our gross profit dollars and allows us to build a gaming mouse, that G602, only costs EUR 60. That's how we're going to bring wireless to the masses. Those are the three technologies we created. LIGHTSPEED solved lag. It's wireless that's faster than the competition's wired. POWERPLAY solved battery life, gives you infinite battery life. You never have to worry about your battery again. Then we said, "Okay, now how do we take this and bring it to the masses?" That's where we invented HERO, a brand-new sensor. It's wireless for everyone. Now the last thing we had to do is, okay, now that we've solved all those technical issues, we have to go educate those people that still have those perceptions of what wireless used to be like.
That's where we create a very simple marketing campaign. We call it No Wires, No Limits, and it's a combination of everything from awareness to consideration, all the way through conversion. Because gamers inherently live online, a lot of the material we create is online digital content, photos, videos, working with top influencers, bloggers, working with the pros, so that when they're in their video, they're telling the stories. We then bring that into point of sale through product ads and online through e-tail and at retail. Here's a quick look at one of the videos we put together to show off POWERPLAY so people could see what POWERPLAY was and get a little bit excited about the technology. Let's take a look. In summary, that's what we're focused on for gaming. One is continue to build superior products and experiences.
Wireless is a big piece of that. We've just started, with LIGHTSPEED, POWERPLAY, and HERO. There's still a lot more to be done to really make wireless truly accepted by everyone in the PC gaming space. We just started that journey. We're going to continue it. Then to validate that, we're going to continue to partner with our pros to make sure we're building the highest performing product that can meet their standards. With that, I'm going to turn it back over to Vincent.
Before we do that, we're going to take just I want to make sure you're fresh for Vincent. Vincent will be very disappointed if you weren't. I want to take five or 10 minutes. Just stretch your legs, get out, walk around, get something to drink, then we're going to come back, and Vincent will go. Okay. If you can make your way back over to your chair.
Not yet. You put it on the last page of four. Is that working? Yeah. Cool. Thank you. All right. Hopefully, you had a good coffee. Front row luck. Okay, good. Oldest, newest, coolest, they don't fool me. All that matters is that they show me the money. Just to be very clear, that's how we drive the business. I'll walk you through the financials. Bracken mentioned it's been five years since I had the privilege to join him and drive the turnaround of the company. I remember May 2013. It was not in this room, but it was in Zurich, and Bracken presented his first outlook for the year. Many of you were there, actually. If you remember, the first year was presented as -5% top line and 5% operating profit margin.
I was a small, little individual investor, and I was thinking, "Oh my God, it is so conservative. They can only make it." To my surprise, many of you were very skeptical. Felix was at Credit Suisse, and he was like, "Ooh, that's really aggressive." I remember that. The reason I bring this anecdote is because I woke up this morning, as you know, we put a guidance of high single digits top-line growth rate. If you use midpoints for the operating profit margin, it's 15% growth, which by any one of my standards is very good guidance. All I could read is, "Oh, this is really conservative." The world has changed, and it is what it is. Why the change? Is because we've driven this overall turnaround, right? FY 2014, FY 2013. Was really resetting the business, rationalizing the product line.
Bracken mentioned over 80% of the revenue was associated to PC or the PC environment, we only had 20% of our revenue positioned on growing markets. Very quickly, we started to improve profitability and credibility by delivering every quarter. If you remember, we had a concept of profit maximization for certain categories. We're focusing on growing the profit first and foremost, and then the concept of growth categories, where we were growing the top line. Then we delivered the turnaround in about two years, confirming my first impression that Bracken's targets were very conservative. We started to shift our mindset to how do we position the company for growth?
We refined our methodology, we came with the analogy of the tree, the plant, and the seed, every one of them needing care to be able to continue to evolve and live in the garden. We started to invest, I'll come back on that methodology. We started to put new guidance, I don't know if you remember, but around that time, we started to say, "Hey, we can grow the company mid-single digits." I think that was our only point in time that you and me were kind of on the same page. Yeah, sounds about right. We delivered. Bracken mentioned some of the growth rates, I'll come back to that, but 4%, 9%. Then two years ago in this room, we say, "Hey, we're going to need to think about our portfolio and our methodology.
We believe we have growth opportunities in every of the markets we participate. We're going to really invest for growth." I remember it was Joern UBS session. "How is that possible? Really think you can grow in PCs?" We say, "Yeah, we think we have growth opportunities to really attach to the installed base." We started to guide the company high single digits, and you know what we've delivered at 15% last year and 10% to 12% this year. Then we put a roadmap in place, $2 EPS.
Invest for growth and $2 EPS maybe don't match, the reality, we put this $2 EPS roadmap in place as a guiding and a framework moving forward and saying, "If we are ahead of our business, we're going to continue to invest." Our goal is not to pull up to the IPS or beat one quarter or beat one year. Our goal is that you can count on the $2 EPS by FY 2020, in the meantime, the upside we have, we're going to invest to accelerate the performance of the business. That's the framework that guide us forward on that principle. Why did I come back on that?
It is because everything we've done over the last five years, we've integrated that into learnings, how we manage the overall portfolio, then reproduce some of those learning on how we manage each one of the categories in each of the markets. The result is about to close here our fifth year of growth. We constantly reevaluate the portfolio. Every category, every year, we go through our strategic planning framework, say where are we in the overall life cycle of the category? How do we want to treat it? How much do we want to invest? What's the growth opportunity, the adjacency, market share gain, et cetera? We have about a good base now, down to 40% of our overall revenue, show you the transformation we've done over the last five years.
As we went to rationalizing the resources allocated to that category, we started to see opportunities to grow, we've been growing in low single digits in that whole base. If those who have invested in software business model for software business in the past, this is our maintenance revenue. This is the revenue that really delivers our base that we can leverage to then grow into new categories. It's a very important piece of the business. Definitely, Art here is giving me the money that I expect for all the SKUs he put out there. Then we start growing, gaining share in every one of the markets, entering new categories. Scott has talked about Video Collaboration was almost non-existent or starting from a webcam five years ago. Then adding acquisitions to those growing categories. Mobile speaker becoming an important part of our portfolio.
Knowing that will come to a certain maturity level, we're going to continue to add new categories, we bought Jaybird about two years ago now. Gaming is the best example of all of those, right? Some of the technology is older. We started to invest more. We're gaining share in the market we participate. We started to build adjacency going into the console and going into other categories, we complement that growth through acquisition. That's definitely the business today that has the best momentum across all of the growth levels we have. That delivers the growth rate that you've seen, 2%, 4%, 9%, 15%, 12%-14% for the year. Very strong performance overall. As you know, we've guided for six consecutive year of growth moving forward.
The trick here to continue and sustain that growth is really to develop and continue to develop a diversified portfolio. We know that every one category will have its ups and down, and some will be in structural growth for many years. Others will have a shorter life cycle. The diversity of the portfolio enable us to continue to invest into the different areas and maintain growth overall. For the year, if I use midpoint for the guidance here for FY 2018, we have Creativity and Productivity on track to close at around a low single-digit growth rate, 3%. It's really linked to the install base. You've heard about the PC market being somewhat stable, flattish, minus one, plus one. The install base is really big and offers a good opportunity to maintain a certain growth rate.
The two key growth driver for next year is really gaming and video collaboration. When we look at the current momentum we have in those markets, when we look at the market momentum and the competition, we believe we have a unique opportunity to grow those businesses significantly. The FY 2018 growing video collaboration 35%, gaming 45%, granted some comes from acquisition, we look across all growth drivers to maintain that momentum. Music becomes a big market that's more dynamic at this point in time. There's many categories for us that are below that market that we address. Mobile speakers, Bluetooth mobile speakers, becoming more mature, low single-digit growth rate. We still have some PC audio that's obviously in decline, has been declined for a few years. New areas like the wearables that we have or new seeds we've tried with the mobile speakers, BLAST and MEGABLAST.
It's voice-enabled, it could be used as personal assistant, we'll see where that goes. Definitely, a lot of dynamic into that market. Smart home, it's very fragmented still. Last year or this year, we benefit from the traction from integration of our home control and Alexa. That will stop at one point in time. It's still a small piece of our overall portfolio, but we're staying close to that smart connected home as we know we have a lot of technology and DNA to play in. Mentioned we're on track. If you remember, our number one commitment when we give you financial guidance is to deliver the bottom line. We guided the year at $270 million-$280 million. Overall, we're trying to create operating leverage year in, year out.
It may change, but we're on track to our long-term model of 10%-12%, which we put out two years ago. That really comes first and foremost since we're in a period of investing for growth from the growth. Organic 10%-12%, adding acquisitions. You're going to see a very solid organic growth, then supplemented by adjacencies that we would have acquired. Gross margin or earnings growth, gross margin midpoint of our long-term range, 36% for the year, slightly under last year. You guys know we had a couple of one-time items this year, but overall trending in the right direction towards the high end of our range, 35%-37%, then delivering on the bottom line. Then we plan to continue to develop our capital allocation framework. Acquisition of ASTRO this year, very successful acquisition.
Then dividends or growing dividend, which is our policy, you know that. Then the buyback program. We come back on the approach with some numbers. This is a graphic that represents for a period of 2 years, the incremental revenue, incremental gross profit, and incremental OpEx. In the first 2 years, remember, revenue was declining -7% in FY 2013. Overall, for the 2-year period compare, revenue was down. We're resetting, rationalizing all of our product lines. As you know, as a result of that, we exited the OEM business and did a few things, lifestyle and others. Gross profit was declining, and we were reducing our resources. We positioned for growth, started to have a moderate growth, 2%-4%. With that, we started to slightly improve gross margin. In the first period, it was 33%.
In the second period, it was starting to move to 35%. We're still lowering our OpEx, but we're shifting a lot of our resources from one place to the other, from the place where it's declining to the place where it's growing. Then we're investing for growth. You see as the last 2 years, a lot of incremental revenue, gross profit, and incremental expenses. I put this out there because one of you, I think, was not nice to me in one phone call and said, "Vincent, you lost your touch. You're not cutting OpEx anymore." I was like, "Yes, because we are here, and we're really investing here for the growth opportunity we have." You say, "Okay, I understand, and I understand the priorities." This is a methodology we apply to almost every one of our categories. We acquired Jaybird.
They were doing many different things, wearables, but also fitness bands, et cetera. We first reset the business, rationalized the product line, focused on what else was interesting, trying to see what we need to do from a spend perspective. They were really developing like a startup, invest at all costs. Started to reposition it for growth. Then started to say, "Okay, how can we focus better with the brand Jaybird on sports only, develop a portfolio that's really tailored to that market segment while we are preparing for a bigger period, which is not here yet, investing for growth?" That kind of approach is across all of our categories. I would say ASTRO is the same. We bought ASTRO.
They didn't have to go through a reset because they had a very strong, solid portfolio and a lot of things we can take, but they are in the position for growth. They're at the high end of the segment, we're now developing, and they launched two products, as you know, in the last fall to try to penetrate the mid-range, where we have a lot of market share gain to have. We are now shifting ASTRO into invest for growth as we move forward. That methodology and that approach is across our various categories. We're constantly reassessing. One category could move from all three cycles, then through market dynamics that's evolving, we bring it back to a reset. Say, okay, now the market has changed. Things have changed. Should we reset where we are? We're not shy of doing that.
Internally, we're trying to not be married to our decision and constantly review that portfolio allocation, resource allocations through that lens. I'll come back on one thing. The priority here, you see on invest for growth, which is where the overall portfolio is really grow the top line, improve the gross profit to create the funding capacity to then continue to reinvest into the business and generate that sustained growth. The number one metric here on that list is improving the gross profit. It's not really profit in $ or that count. It's improving the structural gross margin of the business in which we play to then make investment decisions, to invest more back into the gross margin, price, other. Or do I go into building the brand and invest more in OpEx? We make those trade-off real time.
As we focused on improving gross margin, we talked two years ago, and last year we formalized it a bit more about this design for cost savings framework that Urooj reminded you about. Last year, we had about 20% of our product that had gone through that framework. I would say on an annual basis, we have about 25% of our revenue coming from newest product. They all run through the framework, but they're not all successful coming out with a better gross margin. I would say about two-third of our product today that we put through the framework come out with the objectives that were initially designed to better gross margin at the time of launch. Today we have maybe 30%-35% of our portfolio that has gone through that overall framework. Let me give you an illustration with a real case. UE ROLL.
The first version of ROLL came out in June 2015, the second one in June 2016. When the time came for the people to put the spec out and define what they wanted for the products, by what time they wanted to launch, what the cost should be, the focus is really at that point in time, getting the product ready for launch with the right functionality. On time is a number one metric. Obviously, consumer feedback is another one. Cost was not immediately part of the design framework initially, as we have explained. Our approach was post-launch, as volume scales, we start to drive savings and improve the margin over time.
As we now have this notion of, at least one notion in design framework we discussed, we run the other side of the family, WONDERBOOM, which would be the successor of UE ROLL, through that framework and say, "How do we design now for a better gross margin, a product in that price niche?" You can see the success with UE ROLL that we've had. We launched it in June 2017. When it came out, it had about 10 points of better margin than the UE ROLL before. Of course, we don't deliver the same savings post-launch, but it enables us to do a lot of things at launch to get traction, today it is a very successful product in our overall Bluetooth mobile speakers. Back to the financial scorecard.
I think I mentioned last year my number one objective, actually, every year I mention it, is really to create and increase shareholder value, my shareholder value. We are a product company, so the number one metric of course is the product, the NPI, the innovation. Behind that, at the end of the day, we need to translate into financial results. We have about 8 dimensions that look at a very high-level review with the board every quarter and say where we are on those different dimensions. This is kind of a high-level scorecard, I put some score. Someone told me these are American scores. My kids are now in American school, yes, they are American scores. Just for those who don't know, A, straight A student, is the guy you see at the front row.
S is the guy you see at the back row. Sorry, Bracken. Yes, I didn't expect that. That was not a very good career move. In any case, here's where we were in FY 2013. Organic growth, -7% was in that. Acquisition, we even didn't look at acquisition. We really had to first rationalize our portfolio and get our operations in order. Gross margin was 33%. We're not focusing on investing for growth. We're spending to survive. Meeting or exceeding our profit targets, the thing I really enjoyed the most when I look at the business case before joining, is they had missed 8 quarters out of the last 11. I'm thinking, "Can I do worse than that?" This almost can go up from here. Cash from operations.
The other thing I was looking at is companies that have maybe operational challenges at one point in time but are very healthy, balance sheets are very healthy. Cash from operations, always very good cash generator. There was no policy for dividends, and buyback at the time was a missed opportunity, I would say. When we look at shareholder value creation, I've had many shareholders telling me out of the Q3 results, telling me, "Oh my God, where do you go from there?" You guys smashed it. You're straight A students. I can tell you, I actually wore my tie to tell you, if you remember, because I don't think we did a straight A quarter. I don't think we did a straight A year. If you look at FY 2018, organic growth, not too bad. Low double digit is pretty good. Acquisitions, we're okay.
I think we can do a lot better. There's a lot more asset that I think we can acquire, but for many reasons unable to do it. I think we can do a lot better there. Gross margin, improving, trending in the right direction. If I look at the cost framework, and I'm not guiding when I'm going to say what I'm going to say, I think we have the potential to run the business at 40% gross margin. That would be before investments. At one point in time, I think, I predict we'll get there. I won't put a timeline, but I think we have more room to go. We're 36% today. We've improved from 33%, but as we continue to build a very strong brand, and continue to innovate in our products, we're going to improve that metric. Investing for growth.
Bracken would tell me, I would confirm that there's always a lot more opportunities you could invest in. Every day, we're trading off a short-term commitment on profit versus long-term growth, investment for that long-term growth. You know today, I told you where the priority would be. Meet or exceed profit targets. From that perspective, I think we've done pretty well. Cash from operation, good. Growing dividend. We've grown the dividend. They've not caught up with the value. I know many investors are thinking, "When are you going to create a higher yield?" You can't have both. You have capital appreciation, right? We'll do at the right time yield improvement, but at this point in time, I think we continue to just focus on growing steadily every year, the dividends, without looking at where the share price is. Opportunistic share buyback.
We have a $250 million open, which is good. I put a B because there's so many times I saw a pullback. We're very confident in the business, but for whatever reason, we're blocked from purchasing it, I think we could have done better execution on that side. Where we are going from here. Long-term business model. Two years ago, we raised it to high single digits. I mentioned that to 10%-12% operating profit margin. The good news is we're on track to get to that long-term business model. The bad news or the good news is it requires really hard work every day. You can see overall high single-digit growth rate for last year, we've been there. We're guiding there for next year. Every day we're trying to be innovative and bring new product to market.
Gross margin 35%-37% requires a lot of effort, not only on generating the capacity to be there, which is the cost or design for cost, the cost savings in the supply chain, but we need also to be able to keep the price in the market and compete and continue to gain share while we do that. We are about midway there. I think we've made good progress, but there's more to go. Operating expenses, 25% or lower. Last year we were at 26%. I think this year we'll get to 25%, which is not bad. Then we'll see where we go. Operating profit margin, we're about the midpoint and you see the rest. A lot of work. The good news here is there is no change and we are on track to get there. That brings me to the growth rate for next year.
As we mentioned, we sustained the growth or project a sustained growth at a high single digit. We don't guide by category, but we give some indication what we see in the market for each of the market areas we play. Someone was asking me, how is the PC market doing? I hope you understood by now that we're not directly correlated or tied to the units of PC shipped in the market. If that goes up 5%, we won't see our sales go up 5% immediately. We don't have any more an attached OEM business that go with it. We really are farming the install base, 1.6 billion PC out there. If PC unit is stable like it's projected today, that's all good news for us in the long run to maintain that maintenance revenue stream, as I described in the business model.
Continue to plan that business around flat to low single digits for next year. Video collaboration is a growth opportunity. We'll continue to invest in that business. We have a unique opportunity at this point to capture a lot of those empty rooms, and we wouldn't want to miss the window of opportunity here. Music, low single digit. It's a mix again of 4 sub-market or sub-categories. Mobile speaker, Bluetooth mobile speaker, getting a lot more mature. 2 years ago, we had said, "Hey, we forecast this market, mobile speaker Bluetooth, to be flattish to low single digit, or to have the growth rate to slow down." In Q4 '16, if you remember, we tailored our channel inventory. We're down 36% and say, "This is how we prepare the year." Then we grew up 30% that year.
The market was a little bit higher than our expectations. Today, I would say we are here. The market is maturing. There's still growth opportunity and market share gain, et cetera, but we see a market that will be more flattish moving forward. We have the PC audio will continue to be double-digit decline. We have the wearables, which is double-digit growth rate and a huge opportunity for us to play and continue to grow that market. We have what I would call a seed today, which is this personal assistant with 2 guys, really battling Amazon and Google. We launched BLAST and MEGABLAST and JBL and others have launched other similar products, and that market is not really taking off yet, and will be slow and we continue to upgrade our software and stay close to it in case it takes off.
That's a mix of dynamic in the music business. Gaming is definitely a huge structural growth opportunity for us. You'll continue to see us trying to invest and act on every one of our growth dimensions in that business. Smart home, we benefit from a huge help from the Amazon Alexa integration with the home control. We always plan this. It's too small for us, and it's a very fragmented area. Relevant, but we're not forecasting anything at this point and we'll continue to invest and monitor. I built this slide this morning because I kept reading we're too conservative in, I guess, you meant the profit. I wasn't sure. All of you. The question I got directly, either via email or in what you were writing is, what's the real potential? Rather than you guessing, why don't I show you?
That would be the best. We called Ben and said, "Let's quickly build a bridge." This year will be, call it midpoint, $275 million. This is how we drive internally. We had a one-time issue last year in a distribution center. There is no wood. It was made of touch wood, that we do not expect to repeat next year. That's baked into the base as we drive our business. We had hedging costs. When there is currency volatility like we've had, everyone is asking me where is the currency benefit when it's favorable to us? But in reality, every quarter it changes by more than a few percentage points. We have the corresponding hedging cost, about $10 million.
We're planning next year at relatively the same exchange rate as today, which today would mean upside, but I have no idea what it will be in two months, actually even in two weeks. We're not going to forecast that. We just say at equal exchange rate, here's where it would be, we add that in our base. The way we sum up, and of course, there's a lot of details behind, we have about $30 million of incremental profit coming from the high single-digit growth rate, plus the margin expansion in the various businesses we have. That brings me to an FY 2019 potential of $330 million. That's ahead of our internal map to get to $2 by FY 2020.
Bracken and I, when we sit down one morning and say, "Okay, what do we want to do?" We look at all of those investments and say, "Where else do we want to go?" We pick areas that we say, "Let's invest to accelerate our transformation." We put $15 million across incremental investment that would be long-term in nature. That's continuously upgrading the software skills that Bracken mentioned this morning. It would be giving more money to Ujesh to continue to move a portion of his portfolio more towards wireless. Continue to increase partnership in esports. We go to Scott and say, "Scott, where are we not covered yet?" We monitor and see if we have room to invest more and accelerate the performance of the awareness into the market, and that's what we do.
That brings us to what we can commit to you, which is we're driving the business towards delivering $310 million-$320 million, which again, year-on-year would be a 15% gross at mid-points using both mid-points. Real time, we'll manage the business. There will be plenty of dynamics. One thing we know is every numbers in that over chart will be wrong, in aggregate it will be wrong. Continue to be a strong cash generation. 2015-2017 generated $650 million of cash from operations. We have a strategy well-aligned. First, it's business investment and acquisition, we're going to do that. We have a growing dividend policy. We've grown our dividend 10%, we're going to grow at a certain rate over the next few years, share buyback open.
Over the next three years, FY 2018 to, which is about to finish, to FY 2020, which is this $2 EPS roadmap, we'll generate $1 billion of cash from operations. The priorities have not changed. Acquisition and investment in our business. When we draw on the strategic process with Bracken, we're not thinking just FY 2020. Thinking in five years, how different the company will be, what's our opportunity? Euan was asking me, when I sit here in five years, Vincent, what do you think it will be more of the same? The transformation, you were skeptical five years ago. The transformation between the last five years and the next five years is going to be a lot more than what you've seen. We are battling to regain credibility profitably. Today, we have momentum.
When you see the opportunities we have in front of us to transform the company and create value, there are a lot of those opportunities. That's our number one priority, investing in the business, including M&A and looking at other. We need to accelerate that transformation. We continue to grow the dividend and an open buyback. We know it will not always be a linear path towards the success, and when there will be pullback, we'll look at leveraging our balance sheet to create value. This was the slide that actually was giving the profit. I gave you the bridge so you understand how we think at a very high level, and the assumption that goes it.
I'll repeat, high single-digit growth rate, the fourth year of organic high single-digit growth rate, 15% growth on the profit, $310-$320, and then the various assumptions that you can see here. Let me finish on the $2 EPS. We're on track to that. If you compare to what we presented last year, it's about the same assumption. An assumption to grow at high single digits for the next two years. Moving towards the high end of the gross margin by the end of this process, and continuously investing for growth. If we are ahead of the plan, do not expect us to pull the plan. Expect us to announce new things and continue to invest to sustain at the momentum we have. With that, Bracken, I'll pass it back to you.
Thank you. I was looking at Ujesh and Scott standing right next to each other. If you turn around and look at them, sorry guys, didn't mean to embarrass you. Couple things about them. They had birthdays a day apart. Scott's was yesterday, and Ujesh's was the day before. Happy birthday. Second thing is, they're a good reflection of the fact that we are a portfolio business. We're a portfolio of both categories and brands now. Ujesh represents one part of Logitech, which is cooler and younger and, no offense, I think you're almost the same age. It's one part of Logitech, and Scott represents a different part of Logitech. I have to say, which is in the enterprise now. We've actually slipped ourselves inside the front door in the enterprise, and we belong, which is a good feeling.
I want to wrap a little bit here. If you look at the portfolio story, it's portfolio of products and now beginning to be a portfolio of brands. I have to say, I love being in a portfolio. I would hate to be in a single brand company, a single product company now. Not single brand, a single product. I would hate to be in a single product company because if you think about the single product companies that you know of that play in our space, it's hard. A single product company in a single category gets to experience front on. In the beginning, they get the amazing tailwind of the category they started in, and it's a good feeling. Boy, it's beautiful. It blows and it blows.
Later they get either the strong headwind that is inevitable in any category, maybe that dies down and the tailwind comes again. They end up in different categories. We have a portfolio, and we'll always have a portfolio, and our portfolio will be expanding. That's our whole concept, the whole strategic. One part of the strategic value of this company is that we will have a consistent, long-term, sustainable growth rate because we're a portfolio. That gives us room to breathe where we need to, and room to push the accelerator where we want to. I talked about the capabilities, and I walked through some of them today. I won't repeat any of them, but I do want to come back to culture.
Vincent Pilette said, "Boy, we have so many opportunities ahead of us that we'll probably look more different in five years from what we look like today than we did today compared to what we looked like five years ago. I think that's probably true. I think it's also interesting, just a different observation, on culture. I would say we're more different culturally than we were five years ago than we are from what we were 15 years ago. We've gone back to what we were. We've rediscovered who we were, and I think we're going to try like crazy to hang on to it and keep honing it and keep making it more valuable because the future is not going to be. It will not reward the old world of the big, thick, hierarchical organizations.
It's going to reward the fast, the agile, the ones that act and think and feel small, no matter how big they are, and we're going to try to be one of those. I want to quickly step through the different presentations you saw from the business group leaders. If I start with Art, I love having Art come to present. I could have had somebody named Tolya, who is Art's counterpart in mice, come to present. The reason why I liked having those two, either one of those two, and Art did a phenomenal job, is that in either case, I wanted to tell a software story. I didn't want to tell a hardware story. Art's story, if you listened closely, was, this is maybe the best piece of hardware we've ever created in this category, but that's not the story.
The story is that the software unlocks an incredible new experience that no one has ever done before, we're just getting started. We could have told exactly the same story in the mouse, where we brought something called Flow, which enables you now for the first time to be able to use the multiple computers on your desk in a seamless way with one mouse, dropping and dragging pictures from one computer to another one, from a Mac to a PC. It's never been done before. I wanted to tell that story, that software story, on the oldest world we have, which is the PC, because we're doing it everywhere. Get ready and look ahead. You'll see it in the future in everything we're doing. The second thing I wanted you to see was Scott. I said it already, but it merits repeating.
Our products always found their way into the enterprise. We've been a B2B company for as long as we've been a company. We never thought of ourselves as a B2B company because we focused on the user. Our products somehow wound up in companies and somehow got dragged through the side door or somebody brought them in. They ended up on desks. They ended up everywhere, but we really weren't a B2B company. Five years ago, we made a decision. That's an interesting space, and maybe we can play there. Roll forward, we're at CHF 200 million run rate in a pure B2B business, and we like what we see. This feels like a place we belong. I wouldn't have said that five years ago, but I'll say it now. We belong there. It's a really cool space, and it's just the beginning.
If I have to go through and talk about the gaming business, which I think in some ways it's really ironic that I'm in a room full of people who are over the age of 20 or over the age of 30, I won't go beyond that, and that I'm calling gaming cool. If you had been here five years ago, certainly 10 years ago, the gamers were the nerds. They were the nerdiest. Now gaming's become the coolest. If you don't believe me because you're a little distant from it, because you don't have kids that are in it or you don't quite get it yet, stay tuned and watch the Olympics. It will come. This will be an Olympic sport within the next Olympic or two, and it really is the hottest, coolest thing there is, and it's so fun to be in it.
Vincent went through our forecast, and I think at the end of the day, we continue to be confident about what we're doing. We're excited about what we're doing. We're not short-term, but we realize there is a short term. We have to live in the short term. We love the short term because it helps give us the heartbeat of the company. It drives us to deliver in the short term so we deliver the long term, but we're here for the long term. We're really here to build an amazing company, and we're going to keep working at that and keep doing these sessions here and in New York and in London, wherever it is next. Year-over-year, you'll hear a very similar story, which is we think there's a potential.
We think there's a potential to build a multi-category, multi-brand company using these technologies that are of today and of the future in a way that hasn't been done before, and we want to be one of those companies. I'll stop there, and we can take questions. Thanks. Yes.
I messed up.
Yeah, you probably do need a microphone. Are we recording this? Yeah, I guess we are. Yeah. Vincent, you might want to come up here because I'm sure we're going to get enough questions for you that it'll keep you busy.
Thanks. Thanks a lot. Ananda Baruah, Loop Capital. Congratulations on everything that you guys have accomplished over the last handful of years. I guess two questions for me, and these are appropriate for both of you guys. Just going to the long-term forecast, it seems really clear that you guys feel really good about the platform that you've built. You sort of said two times today, each of you, that you think you can accomplish more, which is anecdotal, over the next five years than you have the last five years. Just if you sort of work the weighted averages, particularly with the traditional business or the growth businesses, let's say, becoming a larger representation of the revenue stream, what's the thought process behind sort of the high single-digit view on the long-term forecast?
I can appreciate the sort of the '19 forecast, but what's the thought process behind high single digits on long-term forecasts when it seems like you guys feel really excited about the platform you created, and you've had recent success that would suggest it's possible to do higher than high single digits? I have a couple follow-ups.
Mitch, I'm going to let you respond to that first. I'm going to follow up on it as well.
You want me to respond?
Yeah.
When we say we'll do more in the next five years, I'm not even sure I'm thinking financials. Financials, we have to follow, right? You have to show me the money at the end. I'm thinking about transformation. If five years ago, right, when we're 90% PC centric, Bracken would have done today's presentation. You guys would have walked him out of the door and said, "This guy is totally out of reality." Sometimes we portray on, when we do our strategic planning, say, "Where would the company go with our current skill set, R&D, the market opportunities? Where do you think it's going?" We put on the board five-year plan. We're surprising ourselves.
Bracken finishes the meeting by saying, "I'm not even telling you what I'm thinking for 10 years." I think the opportunity we have ahead of us, this amazing diversified portfolio. In the middle of June, you think everything is working well, I can tell you every day I come in the office and I'm yelling at everybody because it's not working the way I would want to work, literally. Now, if you translate that into financials, I don't know and I don't want to predict it, to be honest with you, how big. Because I don't want to be driven by a number. I want to be driven by a market opportunity, a real transformation of the company. I can go into all dimensions. Distribution. We would have a different distribution, more distribution? Answer would be yes. Business model.
Would we have other business models? I can tell you, once we look at the board, yeah, we would have different business models. From all of those dimensions, I think, we're not talking about five years because-
No
there's no point, right? We need to go into this reality. We definitely are thinking about it.
Yeah, I'll just add one thing to that. I totally agree with Vincent. I guess when I think about long-term business model, we look out a few years. Our long-term ambition is very significant, otherwise I wouldn't be talking about multi-category companies. I'm just not that fixated. When we think about the business model, we're really just thinking about, okay, that's kind of what. We don't exactly guide to that in the long term. We basically say, "That's what you kind of ought to be able to count on." We should be trying to hit that or better. We may have years where we don't hit it, or we miss it, we may have years where we over-deliver it, that's what the role that-
maybe you give me an idea, Mitch, to rename the long-term model as medium-term model.
Yeah.
That's actually helpful. All of that is very helpful, thanks.
Okay.
just one quick one, Bracken, on the near term, since you actually
Yeah
expressed your enthusiasm for near term. In the press release this morning, you mentioned maintaining maintenance of the FY 2018 guidance. We're into the last handful of weeks here of the March quarter. You have good business momentum at your backs, and I believe if we calibrate to, say, the midpoint of the FY 2018 guidance, it suggests, Vincent, revenue seasonality. Well, I think it suggests sequentially revenue down 30%-35%, and you guys typically do down 25% sequentially. Is there anything that we should put for, I know you had some one-time things, I think, in the March quarter of last year, that we should be keeping in mind, or is there maybe just some prudence going into the last month of the quarter here?
Can I answer that?
Yeah, go ahead.
Few comments I want to make. We closed Q3 with 18% gross in constant currency, 22% gross in US dollars, everybody gets excited, "fantastic quarter." I say, "Yeah. That's not where we're guiding the whole thing, right?" The dynamic in Christmas quarter, you need to really understand, you want to be on the shelves, you want to be present everywhere until December 31st. Don't know when sales out will be in. We don't want to take anything. Q4 is the reverse. There's no really magic event at the end of the quarter, you want to finish the quarter as lean as you can going into next year, and as prepared as you can. Normally Q4, this is not foreign to you because we talked about it prior years on the call, I said, "If we have room, we put in investment.
If we position all of our products, we're trying to be as lean as possible going into FY 2019." When we give our guidance, we consider all of that into our mind. I think the only dynamic I have to talk about is the mobile Bluetooth speakers. Q3, we're up over 30%. We say, "Guys, this is not what the market is." We sold a lot of BLAST and MEGABLAST. We gained share in mobile speaker, we know the market is slowing down there. We'll be as cautious as we can, preparing for FY 2019. All of those dynamics, like it was in Q4 2016, if you remember. All of those dynamics are incorporated into the overall Q4 number.
Thanks. Appreciate it.
Good. Thanks. Mitch?
Thank you again, gentlemen. Quick question. One of the things I often hear from investors is the gaming's been on a tear for you guys, the segment, but how much longer? I see you guys are obviously increasing kind of your outlook or expectations for that segment in terms of growth for FY 2019 relative to what you said in FY 2018 at the Analyst Day. Are there any key drivers that makes you even more positive on the gaming portfolio? How long does this? I know it's still under-penetrated. Is there anything anecdotally that you could point to that would suggest that gaming accelerates into FY 2019 relative to what you saw in FY 2018 at the Analyst Day?
Yeah, I think at the end of the day, you're seeing the same thing we're seeing, which is every quarter, every year since I've been here, every quarter this year, we look at our results and we look at what's happening underneath them, and they just look very sturdy. We're not executing as well as we could. I'd say we're not executing as well on product execution, innovation execution. We're not executing as well in terms of investing in the right marketplaces. I think we've got opportunity. Will we get that exactly right? I don't know. I'd say from a secular growth standpoint, I don't see any reason why gaming won't continue to be a very, very strong growth picture for the long term. In that case, I'd say 5 years+. Beyond that, who knows?
If you can add a couple of details. In the gaming number, you also have the runway of ASTRO, which we closed on in September, right? It needs to be normalized. That overall gaming, I would say, is structural growth. It's kind of the same growth continuing to penetrate more. It has more room for penetration. We have our own dynamic. Whether it's ASTRO being able, from the high end of the market, to gain more share in the mid-range, where we see a lot of market share gain opportunity, or Ujesh's that still need to transform from 80% wired, 20% wireless. If you compare that to C&P, we think we have a huge opportunity. All of that are more opportunities specific to what we're doing today in the market.
Since we rented this whiteboard, I'm going to use it.
Great.
I was waiting for the moment. I'm going to draw you a picture that I think. Maybe you'll think this is interesting, maybe you won't. I apologize if you can't see it, I'll turn it around. This is age, and this is percentage, and this is 100%. This is age 80, this is age 70, and this is 60, and this is 50, and this is 40, and this is 30. I think there are a few people in the room 30. This is 20, and this is 10. This is sports. This is participation sports, okay? When everybody who's kind of age 80 and 70. We played regular sports, regular physical sports. I played basketball. I ran. I did a little track and field, played a little football.
If you go down and at 60, they were still playing a lot of traditional sports, at 50, 40, 30. Even today, if you've got kids, you know they go to school, they play traditional sports. It's not changed very much. Maybe it's slightly less than the 90% it used to be. Maybe it's dribbled down. Let's put gaming or e-sports on here. Those 80-year-olds out there, when they were growing up, they didn't play a lot of e-sports, right? Not a lot of gaming back then, not that kind of gaming. Nor was it for 70-year-olds or 60-year-olds. I'm 55, and there wasn't a lot then. A little bit, maybe. Ujesh. I'm not going to give your age, Ujesh, but he's not 50. There was a little bit.
People like Ujesh were the friends players. It's getting a little bit here. Now we're getting into the 30-year-olds, and I've got 25-year-olds. This is what happened. This is e-sports. Okay. This is regular sports. This is the picture. Now, the reason why I'm drawing this picture and reacting to your question is this is what's going to happen. Three years, five years, 10 years, 20 years, 30 years, one day it's going to look like that. This is destined to be a permanent long-term growth. This will be the biggest sport in the world. There's almost no doubt in my mind about it. This is the future. Now, in a very short timeframe, which I'd say a year is, can you predict exactly what's going to happen? I don't know.
I would say over the long term, this will happen. Next question. Yes.
Yes. Mike Foeth, Bank Vontobel. You're showing this cloud as your new platform-
Yeah
For the last few Investor Days, there are two question marks.
Okay.
They always have stayed two question marks. Now we have.
I'm glad you're that consistent on those question marks.
Now we have some of your growth categories, tablets disappeared, sort of, and music maturing. I'm getting nervous, you know. If one of the others starts to mature, then we're going out of growth. When does one of these question marks turn into a picture?
Well, we're a portfolio, right? Today, we're a portfolio of not question marks, but actual categories that are driven off of different service platforms, largely now cloud-based. I believe that we're always working behind the scenes on new categories. Earphones is our latest one, and it's really interesting because I think everybody in this room has some kind of earphone, or maybe 90% of the people in this room have some kind of earphone. I would say of you, probably 15% have a true wireless, totally wireless earphone. That category is absolutely a cloud-based category because what we use our Ultimate Ears for, which is totally wireless, is for listening to music predominantly. Whether it's making phone calls or enjoying entertainment or whatever it is, over time, all of you will have true wireless. It will happen. It's inevitable.
That category will continue to grow. That question mark will turn into a couple of different cloud services, some overlap with some of the other clouds, which is the way it is going to be. I would say, as we continue to work our way through our seed growth program and build out new categories, we will naturally get there. Can I tell you exactly when? No.
Maybe, as you mentioned, Jaybird, can you maybe give us an update on sort of how the positioning looks like now.
Yeah
In terms also of the distribution? Where do you stand in sort of redirecting the distribution to sports?
How the growth dynamics sort of look like.
The good news is we didn't really have to reposition the business around sports because it was a sports brand. The users who love it's a sports brand to them, and that's the way it is. Where we are doing repositioning, it's a very direct, clear, strategic, pure distribution is both inside and outside. We're making sure that our products are completely viewed as positioned for the athlete and that our people and the people who work in that business live and breathe that so that we're through and through. We're still in, I would say, the early days of really building a platform that is a sports platform, that is a global platform. We've started to distribute in Europe, a little bit in Asia. We're still early days. We're not going to rush this as fast as we can.
We're going to be very systematic and careful to build a long-term, sustainable, and sturdy business model. We're not going to go after the whole market. We're going to go after a slice, because if we try to go after all of you with for all kinds of communication, for everything, we're going to be competing directly head-to-head with people we don't like to compete with. You know my view of that. We'd much rather be a big fish in a small pond. Okay? Yes.
Thank you. Two just quick questions, please.
Sure.
The first one would be, you were mentioning software will become more and more important for you. To reduce the complexity for me, can you please provide us with some more clarity? For example, are you really looking for 20, 30 new software engineers? What do you need to invest to give us really some more visibility here? Also, how many % of your product launches really to some extent be supported by software, improving price point and gross profit margin?
Let me answer that one first before you go on, because it'll be easier to keep straight. First of all, are we looking for 20 or 30 more software engineers? Yes. We've already done that times two or three. We're continuing to staff software engineer, and often it's at the expense of other positions within the company. You saw our G&A, we brought it way down, and we'll keep it down. We're investing strongly in software engineering. We now have, as I mentioned earlier, we have a software engineering leader in every business category now, and that's not just to put them there. It's because we really need them. Even in our PC Peripherals business, we have very strong software engineering going on inside that business, but we also have it inside of our camera business, inside Scott's business.
Scott's software engineering, our engineering leader, by the way, is actually a software engineer by training. We're headed there, and what percentage of our business will be of our new products, physical hardware products, will also have a software engineering or an app content with them? The vast majority. We're already there now. It's really already coming. I think you'll see more and more interesting things coming over the next three, four, five years as we continue to invest and build into the future. We're doing machine learning and video machine learning in just one category right now, but we've really aggressively built our capability there, and that's got opportunities across several different areas of our business.
All right, thanks. The second question would be video collaboration. I remember there was a start of a shift from indirect distribution towards direct distribution. Can you give us an update here? How many new salespeople you're looking for, how successful this model was, and what is the increasing client penetration?
Yeah. I would say it's not direct distribution. It's still going through one or two-step distribution to get to those customers we are calling on sometimes directly with our own salespeople. We have our own salespeople now, and some of them are calling directly on enterprise. Okay? The product's not physically being sold from us to the enterprise. We're still going through other steps. I'm slicing it a little thin to be clear. Yes, we have added direct salespeople as well as salespeople for our indirect channels, and we'll continue to do that. I don't think we've quoted numbers publicly. We probably don't want to do it here. I would say we're up by 100% or something like that over the last year, and we'll keep growing it. It's not a huge number, and I don't think it needs to grow at 100% every year.
I will say, I think the opportunity, if we had more sales capacity out there, is there. We had a slide we took out of the presentation, which showed the kind of jumps we get when we add direct sales capacity into our video collaboration business. We have it broken down by a few different countries where we've done tests and really tried to do A/B tests, and it's very dramatic. We're on the conservative side. Our general view of the world is we want to add systematically and make sure that we're really getting the payoff. We aren't just really filling it up as much as we probably could. It would be nice to have more sales capacity out there.
Thanks. Maybe the last question, if I may, to Vincent. You mentioned gross profit margin potentially can be 40%. Can you help us to better understand the bridge where this is coming from? Is it equally split between product mix, cost savings, scale, or is there anything you want to highlight on the bridge?
40%, just to be clear, is in a hockey model because it's out there. I don't have a timeframe. I think at the core, it comes to the transformation we're driving. First is great products that have great consumer feedback that the consumer want, for which you can get a price premium, right? Making sure that you can drive that value if you want from your product, and the consumer feels he gets the value for the price he pays. That would be number one. Number two is part of the overall branding, it continues the followers. If you have this specific brand on Jaybird and give great products, we need to have more and more of those things.
It's everything else that's tactical. Say, designing for lower cost, managing every line item of your cost structure from your contract revenue all the way down to the mix changes also. When we're growing very fast, we're not focusing on gross margin. We're focusing on penetrating the market, pushing like we did in mobile speaker a while ago and now deliver a $400 million opportunity. As the growth rate slows down, we refocus on improving that margin as well. That's also another dynamic by category that we need to
Other questions? Here you go. Back to you. I'm sorry.
Günther Hollfelder, Baader Helvea. Just a follow-up on your PC gaming forecast. Can you break down the current organic growth rates you're seeing by units and average selling price? I understand there are some innovations also going on right now, which might support also growth rates, not only in terms of units, but also in terms of pricing. I understand that your medium and long-term forecasts mainly around units and increasing penetration, but right now, are you seeing also on top of it, a component from pricing?
Yeah, no, I'll answer it. Vincent, feel free to jump in. I'm largely talking about units, so this is really about the number of people entering the PC gaming space. Our business has been fairly consistent in terms of mix. Now, some of our products sell at much higher price points. If you look at mix across categories, our steering wheels versus the lowest-end gaming mouse we have, that would obviously be a pretty big difference in average price. Overall, I wouldn't interpret my comments as we've got a big mixed story to have here, although I will say wireless mice have significantly higher prices and are very interesting from a margin standpoint relative to wired mice. Certainly, the innovation profile we have naturally lends itself to a better mix story within category. That's not really the guidance we're trying to give you here.
It's really to give you a more general view of what we think is going to happen in our overall gaming business. Okay.
Yes. Hi. Three questions, if I may.
One at a time.
One at a time. Okay, start with a quick one on VC.
Can you elaborate a bit more on the collaborations which you have with Microsoft, Google, and Zoom? How does this collaboration work? Does the Microsoft sales people push your product? Give a bit more color on that.
I don't really normally like to talk much about our relationships we have with other companies, because we're Swiss, and most of you are Swiss, and you know that if you're Swiss and you go talk about all your relationships, you don't have relationships very long. What I would say is that we are Swiss, so we try to play in a very neutral way with multiple parties, and we've always done that. I always call us a, I hope you'll understand this, but I always view us as a harmless, capable partner. Harmless, because we're not a threat to any of these other companies at all. Capable because we really are. Partner because that's the way we were born. This company was born on partnerships, and so we'll try to sustain those.
To answer your question very directly, in some cases, they certainly are encouraging the use of our equipment. Generally speaking, we don't rely on that. We rely on ourselves.
Okay. The second question is on one category, which when I sit down in front of my spreadsheet, scares me a bit, is still the big chunk or rather big chunk of audio speakers for the PC.
Right.
I always fear that this will collapse.
Yeah.
How do you see that particular market?
PC speakers have been in a secular decline for, I don't know, Vincent said two or three years. It's been a long time. I think as long as I've been here, and I guess that will keep going. If it suddenly collapsed, we'll probably grow something else, because people are listening to music. They're going to keep listening to music. I doubt it'll collapse, but no guarantees. It's getting smaller and smaller, so at some point, a collapse would be kind of a thud instead of a bang. I don't think it'll collapse. In our guides, we don't assume it's going to collapse. We also assume that we're going to keep innovating very selectively there. We've done a nice job over the past few years. I always say inside our company, I'll share something inside that I've never shared before.
One of the best-managed categories in our company is our PC speaker business. The fellow who manages that business is a Swiss leader, and he does a magnificent job of innovating on a very low budget and executing very well in such a way that we're gaining market share, and we're also learning things that we can apply to the rest of the company about cost reductions and go-to-market. The PC speakers business, in some ways, is a lovely little microcosm of Logitech because it shows you how to innovate without overspending, to innovate in such a way that you get market share, and to reduce costs in such a way that you can do it elsewhere.
Okay. The last one is on gross profit. Seems to be that you're sticking to this 35%-37% gross margin target despite the tailwind from the currencies designed for cost as you reinvest, I understand that. This has been going on now for a while now that you reinvest your benefits here. How to make sure that these investments will lead to the desired results, meaning higher sales growth? If I take all these
Tailwinds that you have, it's quite a significant amount which you will invest. Is it not fair to say that you should grow double digits?
I'll react. I will let Vincent react too, though. I'll come back to the answer.
Oh, you want me to react?
Yeah.
Yeah. Sorry, I thought you were going to react then. I have plenty of things to say.
I know you do. You know what I'm talking about.
We're debating a lot, right? When currency was unfavorable, we knew we have a direct hit, we started to raise price, we saw a lot of leaders in the market raising price, trying to protect the margin. When currency creates room, a lot of people don't take that to the bottom line and use it to compete more aggressively in that market. It's not a one-to-one either, we want to keep the room to be able to compete and continue to gain share. There's plenty of dynamic in that. You've seen also that I've assumed currency flattish to FY 2018, we want to retransform the business operationally as opposed to counting on currency to give a benefit. The other comment that came to my head is, I don't know if I have a direct measure to give you here.
We have plenty of metrics inside, I would say we are growing virtually in every one of our categories. We're gaining share in every one of our categories, we continue to invest for growth while we grow operating profits faster than revenue. That by itself is a very good measure of success, all of what there is plenty of different things. We create the costs, the savings in the cost of sale, we can decide, you know what? Rather than pricing at the same price, we may price it a bit lower and penetrate different. There's plenty of dynamics there.
Let me attack that one, this is what I was going to bring up. I think this is probably a benefit of my background, benefit or detriment, depending on how you look at it. I've worked in several different businesses in my career. One of them, when I came here, when Guerrino brought me in here, one of the first articles was about the guy came in from running the washer and dryer business to get into high tech. The benefit of working in that washer and dryer business is that I saw in a low gross margin business, the skin-on-skin reality of currency. What I saw in currency is this, if currency tailwinds came, it got very quickly reflected in pricing in the market. You didn't get very long before your competitors dropped price. I'm used to that reality.
Now I know that reality also happens in our business. It just happens over a longer time frame. I'm very hesitant to count on a big currency benefit before it's realized in a sustainable way in a market through innovation or something else. That's probably partly what your feeling is. You won't see us come out. Now I know that currency swings both ways, and we all know it. You've also got to be ready on the downside. If the currency swings the other way, you got to be ready. I'd say on the upside, you have to be really careful because you can disadvantage, you can really cripple yourself for a while by being a little too greedy on the currency side, and it might feel very good in the short term and not very good in the long term.
That's probably part of what you're feeling. Okay. You had one more question? Nope. Next question. Yes.
[Break]
Yes. You redesign your brands or actually maintain some independence, and here is the fact that you're having a premium in some markets, for example, but is there any anecdotal evidence on how you are sustain-
Are there also kind of markets you cannot grow with the market?
Yeah. I'll do my best to give you a high-level snapshot. If you look over the last year, we've been gaining share in most of our categories. The good news is we're not gaining share in every category, and even where we are gaining share in a category, we're not gaining share in every single country. We have opportunities everywhere. We really have opportunities to better execute in almost every category somewhere in the world, and in some, in many parts of the world. If I go through it by category, I would say, as good as our gaming business has been, boy, we can do much better because we're not realizing our full potential in many different countries of the world where we really should be gaining share. Part of it is our innovation, part of it's our execution. Overall, we've been gaining share.
On the surface, you should feel good, but I see it as an opportunity more than a strength. I really think that's really a big opportunity. If I look at video collaboration, it's very difficult to carve up a market there because the market almost doesn't exist. We're helping create a market there. Bluetooth speakers, Vincent mentioned it. We've been gaining market share for many years on Bluetooth speakers. Now the category has started to slow and level out. We'll see. I'm sure it'll be a competitive market. We'll play to win, but it'll be very competitive. If I look at our PC categories, we continue to gain market share fairly consistently. In different parts of the world, as I said, we have different pockets of opportunity.
I would say overall, our innovation profile is enabling us to gain market share, but we never can relax on that, never. Even where we think we can relax, which we don't, there's some pocket or pockets of opportunity that we're missing. It's kind of an obsession within the company, and it needs to be. Other questions? Yes.
Yes. Again, on music, I was wondering what the reason is that you are not specifically targeting the home audio market. You're a very strong brand now in audio, like the multi-room home audio applications you're not at all in. Why is that?
Vincent mentioned, we break our music business into four pieces. There's headphones, which is completely different. There's PC speakers, which we talked about. There's Bluetooth speakers, which are ultra-mobile, there's the home. We really haven't participated, as you said, Michael, in the home. We really viewed that as we're going to stay away from that for now. We're always looking at it. It could be one of those seeds we're working on, maybe not, we've always looked at it. Our first kind of step into it was with the two Alexa-enabled speakers that are sort of mobile, but they're really Wi-Fi speakers at heart because they have Wi-Fi capability, you can go in there. As we've gone in there, we're learning we need more feature functionality actually from the Bluetooth story. We're working to upgrade those, we'll be doing that.
We're also aware that we're now entering a space. You know us. We don't really like to go in and compete head to head with big players in something that's really important to them. That's not our general rule of thumb. Unless we have a differentiated way that we can carve it out, we don't. We are not in the, I would say we're not in any significant way, in a really big way anyway, into the Wi-Fi speaker business. We'll keep looking at it. Could be an opportunity, I don't like the idea of competing head to head with really big players if they think it's really important in a very direct way. If we can't find an indirect way, we probably wouldn't do it.
When you made this gaming picture there-
it made me think of the music, actually, because young people, they use all these-
Oh, yeah
UE BOOMs, they sort of naturally bring it probably into the home.
Yeah
Maybe that same picture could apply to the way music is listened to.
You defined our strategy perfectly. Which is exactly what we're doing. We believe that if you've got a mobile speaker that you want to take elsewhere, you want to take it out to the pool, that's a good space for us. People know us, especially here in Switzerland, for example, where you know that if you get a UE BOOM, it's waterproof, it's sturdy. If I drop it in the water, it's okay. It's great sound quality. You know what? I would like to use that in this room and that room. That's exactly what we're up to. From that perspective, we have entered the Wi-Fi speaker market. Now we've got to make sure we have the right capabilities in it, the right experiences in it to be competitive there. That remains to be seen.
One more for Vincent. You have a lot of cash on your balance sheet. I know acquisitions, you've done a couple over the last few years, maybe a couple of small ones, too. Should we expect to read some sort of an acceleration in acquisitions going forward, or you're comfortable with the run rate you have? What does the acquisition pipeline look like?
Henri's answer is, I always answer, I don't think we have a run rate of acquisition, right? We've identified acquisition as part of our strategy to complement our organic growth rate. The reason we acquire is because maybe we didn't have enough capacity to do own organic investments, or because we want to short the development cycle, or there is a brand, or there's a certain capability to bring to the portfolio. The funnel has been always very good. Always, since we started. I don't know if you remember when I started, I say, "Hey, the whole amount, there's value to acquisition. If we successful there, would be on top of it." We also stay very disciplined. For many reasons, could be valuation, could be culture, could be we don't really understand how we're going to add value, we then pass on those acquisitions.
We're not giving a target or run rate or anything that force us to go. With that said, there's plenty of opportunities, and if we're successful, I think you'll continue to see us using acquisition as another way to continue to grow. In terms of the cash, yes, we have a cash. A good cash balance. We'll continue to use along the three lines that we've mentioned. Which is acquisition, growing dividend, and buyback, I think we can do more.
Okay.
Thanks. It's a follow-up question then also on the balance sheet. You're very dynamic on the P&L. It's your opposite on the balance sheet in the last couple of years, and here in particular, focusing on the dividend. You have an equity to cash flow generation $250 million, $300 million. You have a pile of cash in five years, north of $500 million. What is preventing you of increasing the dividend significantly to $200 million, $250 million per year?
I'll-
Are you listening to this or is it?
We'll switch the table here. I'll answer the finance question first.
Sure.
I would say, obviously we could increase our dividend. I don't think most people who are invested in us today are invested in us as a very stable, low growth, dividend-paying stock. We would rather be upper single digits or even better and investing in the many opportunities that we see ahead of us. We want to keep enough powder dry that we can do that. If we keep raising the dividend every year, you run the risk of getting to the point where you suddenly are in a position where we don't have as much cash as we think we need to be able to drive those kinds of moves. You want to add anything to that?
No, 100% agree. I think our number 1 activity today is we're looking at the M&A pipeline. We keep driving everyone. We stay disciplined, I think that's the number 1 opportunity to create value. The rest is kind of a fallout from that.
Even when you have an efficient balance sheet as maybe, I don't know, call it 1x debt at EBITDA.
This would give you firepower of CHF 1 billion for acquisitions, being very opportunistically and still you could pay out of the cash flow.
Sure. More if we use debt, frankly, right? We never use it. Look, as we said, it's a maturing process. There was no capital allocation strategy. We put one in place, then we put a dividend, then we now move to growing dividend. We didn't have acquisitions. Acquisitions is priority number one. We didn't really close at the rate we thought we could close. We did Jaybird, pretty good acquisition. ASTRO, so far, wonderful start. I think we see a lot of more opportunities. In term of the buyback, it's just opportunistic. We'll continue to evolve that for sure.