Microsoft Could Make Apple Play with Logitech

But Directions on Microsoft analyst Matt Rosoff is more skeptical that the deal will take place, in large part because of the price Microsoft would likely have to pay for the firm.

“Microsoft will likely have to pony up around $6 billion for Logitech [whose current market capitalization was $5.46 billion on Jan. 15], which is a large number, even for Microsoft, and even for a well-established company that made about $230 million in profit on more than $2 billion in revenue last year. Overall, I don't think it's going to happen,” he told eWEEK.

However, Microsoft did fork out about $6 billion last year to buy aQuantive, which only earned $14 million in profit on revenue of $140 million in its last quarter as an independent company, Rosoff said.

However, even though Microsoft has also historically favored organic growth on this front, that could be changing, he said, noting that “if Microsoft really wants to expand into consumer electronics by building more types of hardware, Logitech might be a logical place to start.”

Enderle also said that Microsoft’s hardware unit has been struggling, particularly as he believes that “in a software company like Microsoft, there just isn’t a great deal of interest for folks to work on hardware, so they don’t have a core to build off of.”

Logitech, which has historically done better in this space than most of its competitors, including Microsoft, would give the software maker that core, he said.

Rosoff agreed, saying that while Microsoft Hardware has been around for a long time and consistently profitable. “if you remove the Xbox from the equation, then the Entertainment and Devices business unit, including hardware, is not growing very fast.”