Question-and-Answer Session
Operator
(Operator Instructions)
Your first question comes from Ted Chung with Bear Stearns.
Ted Chung - Bear Stearns
Thank you. I just have a more detailed question regarding the webcam business. It sounds like you actually maintained share in the market but attribute the weakness to the general weakness in the market itself. What type of activity are you specifically looking at in terms of demand generation?
Guerrino De Luca
Thank you, Ted. First of all, we lost share year over year. It was inevitable for us to lose some. When a big player like Microsoft comes in, they take some share. We lost some. I would say I would position our loss between 10 and 15 points. We are still by far the largest player in the category -- I’m saying by far; three times, more than three times bigger than the second player.
We were focusing on actually limiting that share loss, and in fact we did. In every other category in which we compete with Microsoft, we are head-to-head and we have -- so you can see that as a success.
So what happened, as I said in my comments, is that the market that has been growing at a very hot rate throughout the entire calendar 2006 had a significant deceleration of growth. The combination of lost share and that caused our shortfall.
You asked what are we going to do. I said that we are going to refocus a marketing approach that has been fundamentally on holding or defending our share for the last six months, which has been unusual for us in webcams since the beginning. From the beginning of the webcam category, we have been the market developers with the webcam. We have told the world what to do with that and we stopped.
The reason we stopped is that we thought that the arrival of Microsoft would actually create that element of market development that we were not pursuing ourselves. In fact, it didn’t and we can talk a long time as to why it didn’t but it didn’t.
So now we are going back to refocus what we used to spend in promotional share defending point of sales activities into point of sales activities and partnerships that actually promote the category, so everybody will win, including our beloved friends at Microsoft, but we believe that the market leader has this responsibility and we will go forward with that.
- To read the full transcript on Seeking Alpha, click here »
