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Goodsounds
2008-12-10, 00:09
Logitech's SEC filings indicate that the Slim Devices acquisition included an "earn-out" provision based on calender 2009 revenue. It's public information, and has likely been around for a few years. Forgive me if previously discussed here - if so, I missed it.

A few interesting points -

1. Contingent payment (known as "earn-out") could be due in 2010 based on calender 2009 revenue. Max of $89.5 million, which is very large compared to down payment of $20.6.

2. Earn-outs are used to when seller thinks the business is worth more (due to future potential) than the buyer. So buyer says, "if you're right, we're happy to pay more", and the numbers are negotiated.

3. Buyers use earn-outs as a means to keep founders/management in place for a transitionary period.

4. Nothing due if revenue is less than $40 million. Since earn-out targets are (by definition) a stretch, it gives an indication that the SB business was likely much less than this at acquisition time.

My commentary - not unusual to see rabbits get pulled out of hats to achieve earn-out formulas. It makes one wonder if any product/promotion/services/bundling will be announced to help boost revenue? Or, was Boom the last arrow in the quiver and what remains is just sales and marketing to get the best possible results?

Note that it is not unusual to see founders leave after earn-out periods pass. Also not unusual for founders to share a portion of earnout with key employees, and for them to similarly leave if a big payout results.

MrSinatra
2008-12-10, 00:51
i think the guys love what they do, why leave?

but even if they did, i think the open source quality of it will keep it going. logitech definitely needs a product to fill this space. i think they killed all of their own dj music systems.

Goodsounds
2008-12-10, 11:21
i think the guys love what they do, why leave?
People tend to leave after financial handcuffs/incentives expire. It's "been there, done that, what's next?" Either the earn-out is triggered and they're loaded and want to enjoy their loot, or they fail and don't want to hang around. Probably other reasons too, that's just what I've seen. From buyer's standpoint, it is hard to operate something and make changes when the former owner(s) are present. Keep them for a transition, and then take over. This contingent payment period is unusually long. Oftentimes it's shorter, it's about how long new owners and former owners can stand each other.

I'll bet a line will be forming at the door about 12 months from now.



but even if they did, i think the open source quality of it will keep it going. logitech definitely needs a product to fill this space. i think they killed all of their own dj music systems.

I have no idea, NONE, about the financial performance of this business, and I haven't spoken to anyone who does, so I'm just talking in general. Product lines are kept if they provide future opportunities, adequate current returns and can operate with reasonable levels of management attention. Otherwise, the plug gets pulled.

Look at other consumer electronic product companies with diverse product offerings - unpopular products don't stay around long. No company "needs" a poorly performing product.

If the plug gets pulled - yeah, the products will still be around, and people would be free to continue their hobby. Heck, I saw a handful of DeLoreans out on the freeway a few weeks ago.

MrSinatra
2008-12-10, 12:05
i'm surprised no one else is commening, but your view seems tilted negative without cause...

i don't think logitech would have bought it IF they weren't committed to it.

and i wouldn't be surprised if there are plans to have it support video one day. logitech is a computer accessories company, and i can't see them going back to an "in house" way, b/c i think they realized their in house way paled in comparison to the slim way.

Goodsounds
2008-12-10, 15:29
I thought the information I found was useful because it foreshadows a few things to expect over the next 12 months. That should be of interest to many people here, it may affect them significantly in this realm. But I suspect many just don't understand, don't care and/or they find other topics are of more immediate interest.

My intent was to be neutral and realistic. I hope all this proves to be a great success for all concerned, especially the many dedicated people who work so hard to make it happen for the benefit of us customers. But, often that doesn't happen, I was pointing that out.

bklaas
2008-12-10, 15:53
i don't think logitech would have bought it IF they weren't committed to it.


100% correct.

erland
2008-12-10, 16:50
i'm surprised no one else is commening, but your view seems tilted negative without cause...

i don't think logitech would have bought it IF they weren't committed to it.

and i wouldn't be surprised if there are plans to have it support video one day. logitech is a computer accessories company, and i can't see them going back to an "in house" way, b/c i think they realized their in house way paled in comparison to the slim way.

I don't think the question is if Logitech is committed. There's definitely a reason why Logitech bought SlimDevices and I'm pretty sure some of the main reasons are that they believe in the products and that they were interested in the open source development philosophy.

However, the question here isn't really if Logitech is committed, the question is if the original SlimDevices employees and founders are interested in continuing on the Logitech road or if they like a completely new challenge. I haven't seen any indication yet regarding missing commitment to the product, but I have seen a difference in the interaction with the development community.

The interaction with the development community has definitely changed since the Logitech purchase, from my point of view a lot more stuff happens behind closed doors today compared to before the Logitech purchase. Although, the reason for this might not actually be the Logitech purchase, it could also be that there are more employees today and that the roles among the lead developers are different today than before. It shall also be said that I'm not sure this is a bad thing for the company, it's just one of the things that are different today compared to before.

I think Logitech bought both the products but most importantly I also think a main reason was that they were interested in the development philosophy used. This also makes me think that Logitech wants the original employees and founders to remain, because if the original employees and founders are lost there is a huge risk that the development philosophy and community also is lost in the process. So the real risk as I see it is if the original employees and founders doesn't feel like continuing working under Logitech.

I'm pretty sure the intention was to make this work and probably still is, so I don't think we should be worrying yet. There were a lot of people worrying directly after the purchase that everything was going to be lost, but I think most arguments form these has so far been proven to be wrong. The fact that most new developers earlier was part of the community is also a good thing, from my point of view this is an indication that Logitech really wants the open source development philosophy to continue. I'm pretty sure we would see a lot of changes among the employees if Logitech suddenly would decide to end the open source development and start a closed source direction, fortunately there is no indication that they plan to do this so far.

snarlydwarf
2008-12-10, 16:58
There were a lot of people worrying directly after the purchase that everything was going to be lost

cough, well https://secure.slimdevices.com/products.php?product=Slim-Devices-Signature-Series-Squeezebox-Classic should satisfy them.

Hurry and buy them all now, that silk screen does affect sound quality, even more so, than, well, a switch.

Goodsounds
2008-12-10, 18:02
Snarly,
Excellent comment! You may want to consider the Pandora Boom, though. The signatures were done with a different type of pen and ink, which seems to be more sympatico with the crystaline structure of the case and so provides more undertoe.

Erland,
I know your work is highly respected. You should probably expect the change you describe will happen, just a question of when. Relying on volunteer developers has not (to my knowledge) been shown to be a common or successful model for running and growing a business.

My guess is that the development philosophy wasn't so much a desire to accumulate a circle of people to sing Kumbaya, as much as it was a means for the founders to get development work done for free. I wouldn't expect Logitech (or any other similar established company) to see it the same way.

Moonbase
2008-12-10, 19:30
Just a quick one: I don’t see Goodsounds’ initial comments as negative. »Earn-out-leaving« is common business practise, and I think he explained it very well for those who didn’t know. Btw, I also think the transition period is rather long. Hopefully a good sign, i.e. more stability or a smoother handover. Well, let’s see what happens. We can only speculate. But I do appreciate that even this type of speculation can be openly discussed here.

As I said elsewhere (http://forums.slimdevices.com/showthread.php?p=368012#post368012), I see a lot of benefits and wish all involved parties (Logitech, SlimDevices, contributing developers and of course us users) the very best outcome.

@ snarlydwarf: I’m still grinning. Great comment.

@ Goodsound: I agree with you on development philosophy. Within a business unit, dev cost can usually be (more or less easily) calculated. Not so with Open Source that (partially) draws on input of »external development«. These (and user feedback) can be quite hard to manage. Usually, there needs to be a great need or a very interesting product to generate appropriate input from »outside«, and then it starts to take a serious amount of work »inside« to handle all that, i.e. keep developers on focus, set priorities and milestones, keep release dates and at the same time be able to sell it, keep customers satisfied, plus keep »externals« happy and somehow try to »steer« them as well. Not each and every idea can be realized but some are so important/beneficial to the product that they should. Some task! (And good to see what has been achieved meanwhile!)

Quite interesting to »sit on the other side«, for a change :-)

Let me say I really appreciate what has been achieved both »before« and »behind« the curtains, »internally« and from the user/contributor base. That goes to all of you.

MrSinatra
2008-12-10, 19:34
maybe negative was the wrong word... how about pessimistic?

i didn't mean to imply what he said was offensive in any way.

Moonbase
2008-12-10, 20:06
Well, I didn’t take it as offensive (neither his nor your post), maybe more like critically looking at things—and if not here, where else?

Anyway, each coin has two sides. Why not see it positive? All possibilities can have their charme:

A. The »old guys« leaving (if they wish so) and pocketing a bundle. Good for them, maybe they go and invent something even better. Or just relax on Hawaii or somewhere. Or maybe a new team is even more enthusiastic and brings the product forward a lot?

B. The »old guys« wish to stay since it’s such a great product overall that they wish to keep on rockin’ and the working climate is great. Also great.

C. A mish-mash of above. (This coin has 3 sides, hee hee.)

Let’s just give ’em some input, and hope that the best will come out of it.

radish
2008-12-10, 20:53
Forget about closing SC, it basically can't be done (legally or technically). The open source model works well for this product and I simply don't see any reason to change. What Logitech have done, which incidentally I think has been handled really well, is to reinforce their in-house team with skilled devs who _can_ be managed and scheduled to implement core things which are determined to be essential. That leaves the external devs to tweak and add the kind of scratch-an-itch enhancements that are so awesome on the SB platform and so missing with the competition. That's being smart - using the community as a key differentiator whilst keeping mainline development on track with employees.


Relying on volunteer developers has not (to my knowledge) been shown to be a common or successful model for running and growing a business.
Really? Never heard of a company relying on Linux? Or Apache? Or MySQL? Microsoft are pretty much the _only_ major software company who haven't done anything significant in the OS space, and many others (e.g. Redhat) are founded on the idea.

pfarrell
2008-12-10, 21:02
radish wrote:
> Really? Never heard of a company relying on Linux? Or Apache? Or MySQL?
> Microsoft are pretty much the _only_ major software company who haven't
> done anything significant in the OS space

Moving rapidly OT:

Do you mean that M$ never did any OS development? That's a bit unfair,
even if most of it was done 15+ years ago to re-implement VMS on x86.

M$ was reportedly a big user of Linux and Apache in the olden days, i.e.
when MSN.com was rolled out. The IIS boxes could not handle the load, so
Linux (I think about RedHat 5) was silently installed. I'm sure that
there was an immediate engineering effort to make whatever NT and IIS
version at that time handle the load, as it was pretty embarassing.


--
Pat Farrell
http://www.pfarrell.com/

Goodsounds
2008-12-10, 23:07
Radish,

I've looked back over my comments, including the one you quote (the key word in which is "business"). Nothing there I want to change.

I'm not sure you were following what I said, you seem to be talking about rather different things. And/or we don't agree, which is okay with me. Disagreement and civil discussion are interesting and lead to better understanding. Agreement is boring.

Thanks,

erland
2008-12-11, 00:06
Sorry if this is getting a bit off topic.


Forget about closing SC, it basically can't be done (legally or technically). The open source model works well for this product and I simply don't see any reason to change.

A closed source model would probably have to be based on completely new code which doesn't make much sense. There is no way legally to change the current SqueezeCenter code to a closed source model.

The only reason to change the open source model would be if Logitech decided to completely change the technology to something other than Perl. However, with the current crew this doesn't make much sense as it would be a huge investment.

The question isn't really if this is going to continue to be open source, the question is if we will see the same involvement from the development community in the future. The interest of helping a small company like SlimDevices for free is one thing, doing the same for a large corporation like Logitech is a completely different thing, especially if development of the core is handled pretty much behind closed doors.



What Logitech have done, which incidentally I think has been handled really well, is to reinforce their in-house team with skilled devs who _can_ be managed and scheduled to implement core things which are determined to be essential. That leaves the external devs to tweak and add the kind of scratch-an-itch enhancements that are so awesome on the SB platform and so missing with the competition.

I completely agree, this is very smart and is probably the only way to get economics and keep up with the competition. You have to have a in-house team that is large enough to take decision and do development based on time schedules and economic factors.

The trick here is still to keep up the interaction with the development community if you like people to continue long term community commitments. There will always be developers available that make a single plugin they need and then disappears, but to make sure community developers stays communication is extremely important as I see it. Unfortunately, my personal feeling is that this is something that we see less of today compared to before. Just look at how discussions are handled in the "Development" section of the forum, many are left unanswered or without involvement from the Logitech crew. I suspect discussions still are happening among the Logitech crew but they probably happen behind closed doors.

With a lot of community development there is a huge risk that schedules will slide and features not interesting from an economic point of view will get focus. This is something that is IMHO something that can be seen in many open source project.



Really? Never heard of a company relying on Linux? Or Apache? Or MySQL? Microsoft are pretty much the _only_ major software company who haven't done anything significant in the OS space, and many others (e.g. Redhat) are founded on the idea.


You can rely on an open source project that already contains the feature you want, but it's hard to rely on that it will be finished in time with a new feature you want. Of course, the open source philosophy also makes it possible for you to personally get involved to make sure it gets finished in time.

For closed sourced commercial products you can often get a planned release date, for open source projects this often doesn't exist (with some exceptions). Fortunately this is something that has been improved lately with SqueezeCenter as we now have a roadmap which at least contains the planned contents for the next release and also a planned release date.

mherger
2008-12-11, 00:34
> I thought the information I found was useful

In what respect?

Michael

Goodsounds
2008-12-11, 09:25
> I thought the information I found was useful

In what respect?

Michael
"...because it foreshadows a few things to expect over the next 12 months."

sander
2008-12-11, 09:35
In what respect?

Buying a Squeezecenter device is really buying into the larger system and, to some extent, the community around it.

I've been very happy with the progress that's been made since the Logitech acquisition. virtually every complaint I've had since I bought my original SB3 two years ago has either been addressed or is being addressed in current development.

I've advocated Squeezecenter to everyone I've thought would benefit from it, but I do think it is ultimately a niche product.

Whether the original Slim team is around to advocate for this platform inside Logitech, in a time of dwindling resources, will definitely make a difference going forward in my point of view.

atrocity
2008-12-11, 13:18
Hurry and buy them all now, that silk screen does affect sound quality, even more so, than, well, a switch.

It's also worth noting that the devices were signed by a left-handed person and a right-handed person, thereby improving the stereo imaging.

radish
2008-12-11, 20:12
I'm not sure you were following what I said, you seem to be talking about rather different things. And/or we don't agree, which is okay with me.

Or (3), you weren't following what I said :) I'm pretty sure I was able to follow what you wrote, though I think you're using a much narrower definition of some of the words than I.

My opinion (and you know what they say about those) is that the change you seem to consider inevitable, I consider extremely unlikely for a host of technical, economic and legal reasons. But I could be wrong, the future will tell.

seanadams
2008-12-11, 20:41
Sigh... not this again.

Squeezecenter is NOT "going closed source". As radish says, it's not possible, and it would be a dumb idea even if it were. And with Duet, we've actually become a heck of a lot _more_ open than we used to be.

As for anyone's plans... I don't even plan for next week. Still having fun here. Can't speak for anyone else.

Goodsounds
2008-12-11, 21:37
Or (3), you weren't following what I said :) I'm pretty sure I was able to follow what you wrote, though I think you're using a much narrower definition of some of the words than I.

My opinion (and you know what they say about those) is that the change you seem to consider inevitable, I consider extremely unlikely for a host of technical, economic and legal reasons. But I could be wrong, the future will tell.

I think both of us were doing a better job of talking at the other person, than with. I'll try to clarify.

You've focused on what (I consider)was a minor portion of a string of comments and imputed a meaning that I didn't intend. My comment on the existence of the earn-out was central. Turnover afterwards as a normal event. Buyer takes over and conforms practices to those used by buyer, harder to do when seller's management is still around. I've been a financial advisor for more than 20 years (including buying and integrating, and selling companies), working directly with many dozens of companies and have observed what was done with hundreds of others. You can agree or not agree with me as you wish, my view is based on my experience.

Erland said he was finding changes, including less communication and collaboration. It was to this my comment implying "not if, but when" was directed. Changing to what? I don't know. Frankly, I also don't care. But most things change after an acquisition, that was my thought. Things always change in more ways than ever imagined.

The use of open source software and volunteers for commercial product development - very rare. Perhaps some of the reason for change, perhaps not, it seems to be different from how Logitech develops its products. It's rarely used for obvious reasons. I'll stick with my speculation of why I think it was used here.

I do love my SB products, I wish everyone only the best, especially all the great people at the company. Sorry if my thoughts made you think of me as being the back end of a horse.

Moonbase
2008-12-12, 00:59
[…] [going closed source] would be a dumb idea even if it were. […] Still having fun here. Can't speak for anyone else.
Thanks for throwing that in. We »out here« also like feedback :-)

In my opinion, you’re right: It would be a dumb idea. Hey, and great to hear that you still have fun. That’s what it’s all about, basically.

Johnboy169
2008-12-12, 04:49
Sigh... not this again.

Squeezecenter is NOT "going closed source". As radish says, it's not possible, and it would be a dumb idea even if it were. And with Duet, we've actually become a heck of a lot _more_ open than we used to be.

As for anyone's plans... I don't even plan for next week. Still having fun here. Can't speak for anyone else.

Sean please keep having fun, we need you.

Johnboy

Dogberry2
2008-12-12, 10:38
In terms of the quality of a software product, it isn't really a question of open source vs. closed or proprietary development; it's a matter of development expertise, which usually means training and experience. I think the SqueezeBox line is well engineered hardware, but in some areas the software under the hood is . . . well, I suppose the kindest word would be "amateurish". It works (mostly), and the concept is good, but if one of the things Logitech brings to the table is some better-qualified software engineering, that can only be a good thing. One of the strengths of open source development is that it reaps a very wide swath of ideas, but one of its weaknesses is that hurried, dilettante development of those ideas often doesn't follow professional engineering practices. If Logitech is willing to add some software engineering expertise to the development path, it's bound to make a good product even better.

JSanchez
2008-12-14, 14:07
Just a quick comparison of another open source audio company that was taken over and subsequently pretty much destroyed along with the rest of the community that supported the orginal product. That company was Phatnoise, the company that bought them; Harman International.

I have one of their Phatbox units in my car, and I love the unit. Unfortunately, time and lack of further development has caused the system to start showing its age. A couple of guys have done some further interesting things, but none of the original developer have been heard from since...at least to my knowledge.

I think the SD and Logitech merger (at least to this point) has been an example of the right way to merge a company with broader marketing/exposure with a niche device. I have one of the first Squeezeplayer Classics (silver face/no signatures!). And I love it. The partnership with Infrant lead to my purchase of an original NV. It's a great integrated system. The fact that Logitech didn't materially change the product (and has allowed development to continue with a competitor, Netgear) has prompted me to buy units for my dad, brother, and of course a controller for myself!