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For six years, the Internet Nexus served as my technology blog, but I've since started blogging at the SuperSite Blog instead. If you're looking for the blog, please head there. --Paul

Tuesday, August 16, 2005

Can't win? Change the game

Creative is involved in a bit of George W. Bush-like reality tampering this week. In a Scripps Howard News Service article, we discover that the number two MP3 player maker isn't really going after Apple. No, they're after a much bigger prize.

In November, Creative Technology Ltd. CEO Sim Wong Hoo declared "war" on Apple Computer Inc., brashly predicting his firm's MP3 players would knock the ultra popular iPods down a peg or two.

So far, that war has proven more costly for Singapore's Creative Technology, which in late June warned investors to expect a fourth-quarter operating loss because of softer than expected sales of its MP3 players. Creative lays claim to second place worldwide for MP3 player sales, but it's a distant second behind Apple's iPod, which outsells its competitors by a 3 to 1 ratio.

Sim said his long-term vision isn't just to conquer the iPod but to get Creative's technologies into every home entertainment device, including DVD players, cable set-top boxes and home theater systems.

"Last year I declared war on Apple, but actually I was thinking of something bigger," Sim said. "The war is in the living room. We are going after the living room."

Ah, the living room. Maybe you could have mentioned that last year. Because since then, you've released a bunch of MP3 players, but I haven't seen a lot of Creative technology going in the living room. But, as it turns out, that's because they haven't released anything yet.

The centerpiece of what Sim calls a shift in his company's business model is new audio processing technology called Xtreme Fidelity, which he believes will extend the company's reach beyond computers and computer-related devices.

Xtreme Fidelity is designed to create fuller, richer sound reproduction in standard devices such as headphones, CD players, DVD players and video-game devices. Sim said the technology will even work with competing iPods.

Creative plans to release details about new X-Fi products later this month.

Finally, some interesting statistics:

Since December, Creative has sold about 5 million units of Zen and Zen Micro MP3, which in the Bay Area are featured in colorful billboards often placed near Apple's famed silhouette iPod billboards. Apple, however, sold ... 6.5 million in the second quarter of this year alone.

Creative's share of the worldwide MP3 player market was only 9 percent by the end of 2004, although In-Stat analyst Stephanie Guza said that share has been increasing since the introduction late last year of the Zen Micro players that compete directly with Apple's iPod Mini.

[ Posted at 11:00 AM | Permalink ]