Lacie Group S.A. Business Information, Profile, and History

Company Perspectives:

LaCie has successfully been in business for over 15 years now, and ha s been able to consistently keep its innovative spirit--our expertise and strong teams will keep us moving forward for the next ten years. The years ahead will be Digital; the multimedia world we inhabit is just beginning. The storage needs of professional users will be inter spersed with the needs of private users, storage capacity will contin ue to grow, and network structures will be more and more complex. Thi s is what drives the innovation and richness of our market.

In this fast moving environment, LaCie reaffirms its commitment to cr eate highly functional and aesthetically appealing storage solutions. We are committed to strengthening our position as a leader among mul timedia professionals, and being the first with technological and vis ually innovative solutions.

History of La Cie Group S.A.

LaCie S.A. is a leading developer and manufacturer of computer periph eral equipment, focusing especially on external data storage solution s, as well as display technologies. LaCie produces network drives, ha rd drives, and other storage drives, including tape-based storage dev ices, DVD and CD drives and writers, and high-end LCD monitors. The c ompany incorporates high-speed transfer technologies into its devices , supporting USB 2.0, Firewire, SCSI, as well as cutting-edge technol ogies, such as SATA, introduced in 2005. The development of such high -speed protocols has proved a boon for the company, enabling external peripherals--the company's core niche--to achieve transfer speeds ri valing those of internal computer components. From its beginnings in a Paris apartment in 1989, LaCie has targeted the international marke t. As part of that strategy, the company has developed a local presen ce in Germany, Belgium, The Netherlands, Spain, Italy, the United Kin gdom, Switzerland, Sweden, Japan, Hong Kong and China, Singapore, and the United States. Europe remains the group's largest market, at 53 percent of the group's revenues of EUR 289 million ($310 million) in 2005. The Americas account for 44 percent of the company's sales, and its Asian operations contribute just 3 percent. LaCie's growth i n the 2000s has accelerated in large part because the company has exp anded its product offering from a focus on the professional and corpo rate markets to target the retail consumer market. LaCie is listed on the Euronext Paris Stock Exchange. Company cofounder and Chairman Ph ilippe Spruch is also its largest shareholder, with nearly 61.5 perce nt of shares.

External Ideas in the 1980s

Pierre Fournier and Philippe Spruch spotted a niche opportunity in th e computer market in the late 1980s. Personal computers had become es sential tools in a number of industries, such as the graphic design a nd nascent multimedia industries. Increases in computer technology, p articularly the development of faster processors and more powerful gr aphics cards, introduced a new range of possibilities for professiona ls. Yet the advances in technology also created ever-larger file size s. The relatively modest internal hard drives on most computers prove d inadequate for many data storage needs. At the same time, the relia nce on personal computers also highlighted the need to safeguard data through the creation of backup copies.

Unlike IBM-based personal computers at the time, Apple computers feat ured a built-in high-speed interface, called SCSI, to connect periphe rals to the computer. Fournier and Spruch recognized the potential of adapting storage devices such as hard drives and tape drives to conn ect externally via the computer's SCSI port. The SCSI interface offer ed a second advantage in addition to transfer speed, in that several devices could be chained together to a single computer port. In 1989, the pair founded their own company, Electronique D2, in their apartm ent in Paris's 14th arrondissement. D2 became one of the first in Eur ope to exploit this new area of personal computing.

D2 at first focused on designing the cases to house existing drives, meeting with immediate success. By 1990, the company had outgrown its original location, and in that year, the company moved to a 900-squa re-meter site, still in the city of Paris. The move also accompanied a shift in the group's strategy. Fournier and Spruch understood that, in order to compete in an increasingly global market characterized b y rapid technological progress, D2 would have to develop its own tech nological capacity.

D2 began hiring a team of engineers and building its own research and development team. By 1991, the company had launched its first in-hou se designed product, an internal SCSI card, bringing the transfer tec hnology to the IBM PC market. Nonetheless, the Apple computer market remained the company's core focus into the mid-1990s.

In the meantime, D2 launched the second prong of its strategy, that o f rapid international growth. In this way, the company sought to capi talize on the lack of a strong European player in the external data s torage market. By 1991, D2 had opened its first subsidiary, in London . The following year, the company added subsidiaries in Belgium and D enmark.

Another important factor in the company's early success was its commi tment to developing not only technologically advanced products, but a lso to providing its product with strong design features. As part of this effort, the company turned to a number of noted industrial desig ners, such as Philippe Starck, who helped design a whole line of D2 p roducts in 1992. Neil Poulton became another prominent design partner for the company. The emphasis on design played an important role in the group's success: As external peripherals, the company's products were by nature exposed to view. At the same time, the company's core market of graphic designers and multimedia developers naturally respo nded to the stylish designs of the group's product range.

Acquiring a New Corporate Identity in the 1990s

D2 attacked a major limitation of IBM and Windows-based personal comp uters, which often lacked the physical capacity and software resource s to house both the traditionally parallel port (used primarily for p rinters) and a SCSI port. In 1993, D2 released a new interface that h oused both parallel and SCSI ports. The company also began work on a new cable to provide similar capability, launching the Shark cable in 1994. The Shark became one of the company's best-selling products in to the middle of the decade.

With its European sales growing strongly, D2 moved to still larger pr emises in the town of Massy, a Parisian suburb, in 1993. The company also continued to expand its international network, adding a subsidia ry in Dusseldorf, Germany in 1993, and subsidiaries in The Netherland s and Switzerland in 1994. That year marked the group's transition to an international company, with 50 percent of its sales coming from o utside of France.

The company continued its expansion, adding a subsidiary in Milan, It aly, and Madrid, Spain, in 1995. In order to fuel further growth, D2 brought in external investors, selling a 10 percent stake to venture capital group 3i (Investors in Industry) that year. The investment pr ovided D2 with the capital it needed to enter the North American mark etplace. By the end of 1995, the company had made its first major acq uisition, that of Portland, Oregon-based LaCie, a subsidiary of hard drive manufacturer Quantum. Founded in 1987 and acquired by Quantum i n 1992, LaCie had developed a range of products complementary to D2's own line, coupled with a strong brand name and proprietary software technologies. Yet LaCie offered other advantages to D2. The company's relationship with Quantum, a major supplier of drives used in D2's l ine, enabled D2 to renegotiate its purchasing agreement with Quantum. At the same time, LaCie enjoyed the exclusive rights to develop Appl e-branded external hard drives.

The combined company now laid claim to being the largest aftermarket data storage supplier for the Apple computer market. D2 prepared for a new phase of growth, moving to larger headquarters in Massy in 1996 . The company then went public, with a listing on the Paris Stock Exc hange's "Nouveau Marché" that year.

The public offering helped the company in its next series of investme nts. In 1997, for example, the company made a brief foray into the af ter-sales repair and maintenance sector, buying up NATI. That effort proved less successful for the company, and D2 sold off NATI in 1999. In the meantime, D2 added new markets, including Sweden and Canada i n 1996, and the launch of an Australian subsidiary in 1999.

By then, the company had decided to regroup its operations under a si ngle brand name, LaCie. The company itself adopted the LaCie brand na me in 1998, then opened a communications office in London as part of a worldwide public relations effort. Also in that year, the company a cquired another U.S. company, APS.

Data Storage Peripherals Leader in the 2000s

An important factor in LaCie's continuing success was its ability to adapt to the changing computer market. Of importance, the company wor ked to reduce its reliance on the Apple computer market into the late 1990s, in part to distance itself from Apple's own struggles at the time, but also to take advantage of the surge in the worldwide PC mar ket. The rise of multimedia-equipped computers in the mid-1990s creat ed a new demand for larger and faster data storage solutions. LaCie r esponded with a number of innovative and highly successful products, such as its external 2.5-inch PocketDrive, launched in 2000. The comp any also expanded its presence in the high-end professional graphics and corporate markets with the launch of its own high-end flat-panel displays, such as an 18-inch display launched in 2001. LaCie expanded beyond its core European and American markets as well, adding a Japa nese subsidiary that year.

The development of a consumer market for high-capacity, high-speed st orage devices encouraged LaCie to launch itself into the retail chann el for the first time in 2002. Until then, the company's products had been sold through catalogs, or by value-added resellers, and remaine d geared toward the professional and corporate markets. Yet the consu mer market, driven by music and video applications, became one of the data storage market's primary growth drivers. The arrival of new-gen eration high-capacity drives, as well as the CD writers, followed by DVD writers, opened a new range of possibilities for consumers.

LaCie launched its Big Disk in 2002, an external hard drive featuring 500 gigabytes of capacity. The company also responded to the develop ment of a new generation of high-speed transfer protocols with the la unch of its first Triple Interface hard drives, which featured USB 2. 0 and Firewire transfer capacity, in addition to standard ATA transfe r technology. The company also teamed up with the FA Porsche design t eam, developing a new line of sleek and sophisticated products.

LaCie continued developing high-capacity storage devices. In 2004, fo r example, the company launched its Bigger Disk, featuring one terrab yte of storage capacity. Also that year, LaCie teamed up with softwar e developer Roxio to launch a new double-layer DVD burner for the Mac intosh market.

More innovative products emerged from LaCie's research and developmen t department in 2005. Among these was the Silverscreen, a mobile hard drive featuring 40 gigabytes of data space and the ability to connec t and display video, music, and images directly to a television, with out passing through a computer. In October of that year, the company launched another innovation, the Carte Orange USB drive, which, at th e size of a credit card, plugged into a computer's USB port, with dat a storage ranging up to eight gigabytes. The company closed out the y ear with a new product for the corporate set, a hard drive with finge rprint recognition technology. LaCie stored the secrets of success in the global PC peripherals market.

Principal Subsidiaries: APS Tech (U.S.A.); LaCie Allemagne; La Cie Australia; LaCie Belgique (99.68%); LaCie China; LaCie Hollan de; LaCie Italie (99.00%); LaCie Japan; LaCie Ltd. (U.S.A.); LaCi e Peripherals (Canada); LaCie Royaume-Uni (99.90%); LaCie S.A.S. (France; 99.99%); LaCie Spain (99.95%); LaCie Suède; L aCie Suisse.

Principal Competitors: Teradata Corporation; ASUSTeK Computer Inc.; BenQ Corporation; Micron Technology Inc.; Sharp Electronics Cor poration; Storage Technology Corporation; Lite-On IT Corporation; Hyp erdata; Opengate S.p.A.

Chronology

• Key Dates:
• 1989: Pierre Fournier and Philippe Spruch found Electronique D 2 in Paris in order to develop external data storage systems.
• 1990: The company launches a research and development team.
• 1991: The company forms its first foreign subsidiary in London .
• 1992: Subsidiaries are opened in Belgium and Denmark.
• 1993: A subsidiary opens in Germany; the company moves to Mass y, outside of Paris.
• 1995: The company acquires LaCie, in Oregon.
• 1996: A public offering is made on the Paris Stock Exchange's Nouveau Marché.
• 1998: The company changes its name to LaCie S.A.
• 1999: A subsidiary in Australia is added.
• 2000: A Japanese subsidiary is added.
• 2002: The company begins targeting the consumer retail market for the first time.
• 2003: The company launches a 500-gigabyte external hard drive.
• 2004: The company launches a one-terrabyte hard drive.
• 2005: The company launches a Silverscreen hard drive capable o f displaying images directly on a television screen.