“MP3 player and sound card maker Creative Technology Ltd. is changing its tune – it now wants to focus on profitability rather than market share – but most analysts and fund managers remain wary of the stock saying it will take long for the new strategy to deliver results,” Carey Wong reports for Dow Jones Newswires. “Following the announcement of a weak first quarter net profit last week, five brokerages are keeping their Sell or Underperform ratings on Creative with target prices ranging from S$8.45 to S$11.10 – between 10% and 32% below the current share price.”
Wong reports, “The stock, which has fallen 50% so far this year, was Monday morning up 0.8% at S$12.60. ‘We’d like to focus on the profitability and not market share,’ chief executive Sim Wong Hoo said at the post-result briefing. The statement is a major shift from last November when Sim launched a US$100 million marketing campaign he predicted would give Creative a 40% share of the world’s MP3 player market. But the policy change may have been inevitable after it became clear that Creative’s existing strategy had little chance of success.”
Wong reports, “Analysts say the company’s MuVo and Zen brand MP3 players will garner only around a 14% share of the global MP3 market in calendar 2005, based on projected shipments, compared with 36% for Apple Computer Inc.’s iPod. Most of them noted that returning to sustainable profitability will be equally challenging for the company, which has provided limited information on how it will achieve its targets amid a negative environment.”
Full article here.
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So much for Creative’s “MP3 player war.” Instead of becoming the Pepsi to Apple’s Coke in the digital music player market, it looks like “Sim Wong Who?” will have to settle for the fizz-less “focusing on profitability and not market share.” Creative never amounted to anything more than a mosquito buzzing around the 800-pound Apple iPod gorilla’s head.
It’s hard to tell from the article what Wong means regarding the figure of 36% for iPod market share. Wong writes, “analysts say,” but which analysts and based upon what methodology? We suspect it refers to hard drive-based portable digital music players, but can’t be sure. What we do know is that IDC, for example, divides the MP3 market into four categories: Portable flash-based players, portable hard drive-based jukebox players, portable players that support MP3 CDs and mini discs, and an “other” category comprised of music phones, portable DVD players, gaming devices, and other devices that support compressed files. So, perhaps Wong is referring to one category of the MP3 market. Or maybe the unnamed analysts are just estimating or something? One thing we do know for sure, at least, is that Apple iPod models, before the iPod nano and new 5th generation iPod debuted, accounted for 75% of MP3 players sold in the U.S. in August 2005 according to NPD Techworld.
Related articles:
Beleaguered Creative shifts promotional efforts from music players to new sound card line – September 21, 2005
Apple debuts iPod nano, iTunes 5: how are Microsoft, Napster, Real, Creative, Sony feeling today? – September 08, 2005
Creative explores new way to beat Apple iPod: patent litigation – August 30, 2005
Creative plans ‘very vigorous defense’ of iPod navigation patent – August 31, 2005
Beleaguered Creative Technology’s ‘war’ on Apple iPod not faring well – August 15, 2005
Apple’s iPod shine dims beleaguered Creative Technology’s outlook – August 08, 2005
Microsoft not buying stake in Creative Technology – August 02, 2005
Creative CEO Sim Wong Hoo adds fronts to war against Apple iPod – August 01, 2005
Analyst: Microsoft could buy Creative Technlogy in bid to compete with Apple iPod – July 14, 2005
Beleaguered Creative CEO Sim Wong Hoo ‘optimistic’ the company will survive ‘MP3 war’ – July 01, 2005
Beleaguered Creative may have to write off unsold stock as losses loom – June 28, 2005
Creative Tech’s reduced outlook drags on Apple, PortalPlayer, SigmaTel – June 27, 2005
Creative Tech cuts sales outlook, drags Apple down in early trading – June 27, 2005
Apple passed 20 million iPods sold milestone in early June – June 24, 2005
Apple’s understanding of what really counts makes iPod+iTunes impossible to beat – June 22, 2005
Creative Technology shares slide to lowest mark in almost two years – May 18, 2005
Apple squeezes and Creative’s profit plunges 72-percent – April 23, 2005
Apple iPod pressure forces Creative to drop prices on music players – March 01, 2005
Creative’s self-declared ‘MP3 player war’ against Apple isn’t going very well – January 20, 2005
Creative CEO: Apple iPod shuffle ‘a big let-down, worse than the cheapest Chinese player’ – January 12, 2005
Creative declares ‘war’ on Apple iPod, shoots for 40% market share of MP3 players – December 21, 2004
Creative Technology declares ‘MP3 War’ against market-dominating Apple iPod – November 17, 2004
Mossberg: Dell, Rio, Creative ‘iPod mini killers’ lag badly behind Apple iPod mini – October 27, 2004
Creative pushes to become ‘Pepsi’ to Apple’s ‘Coke’ in digital music player market – August 07, 2004
“War is over…
…if you want it”
most of these rediculous decisions, come from flawed reasoning and pride, creative has made the first step, now for the rest of the non apple companies, to admit fallabilities
what’s with the “Who” comment? those cheap MP3 players enough of an insult without having to make fun of an Asian name. keep the commentary pro-apple, but pc.
yoh, these 36% is worldwide marketshare. Here in germany the ipod is popular, but there are many others as well. In the US you might have an ipod only culture, but in europe and especially asia it’s not quite the same picture.
FWIW, according to the Dashboard convertor widget S$1 = US$0.59
This may be bad for apple as removing competition may lull them into a sense of complacency. The miniscule but ever present threat of competition is what pushed apple to replace the popular iPod mini with the Nano. They had to cannibalize their own products so that someone else didn’t do it for them … I hope that at least some competition remains to keep Apple on its toes and investing in new products
you know, there is nothing wrong with healthy competition. you cant hate them for trying. Creative is a good company with Good products.. The Zen is a good product, but obviously the ipod is better/more popular. They make great speakers, and great sound cards. Let them live their life. Just because someone competes with apple doesnt mean everyone that likes apple has to hate them. I am PRO apple in almost everyway, but im not opposed to competition, or the mix of other products/ideas/companies.
war? there was already no war. it just game over since this summer.
Omigod.. you mean.. Creative’s not a software company.. they are strapped to WMP or some such mediocre player, praying that whatever sense of affinity people had to their ‘business machines’ will rub off on their buying decisions at Best Buy.
Ugh. I’m really sorry Creative. I hated you all this time, and it’s too bad you couldn’t hang around.
On the bright side, it looks like the best, most affordable product is actually winning, and, that’s a mighty accomplishment.
We actually have a competitive market.
Even if Apple gets a 90% share, it won’t be a monopoly until iTunes becomes the dominant source for purchased music, which won’t be for a loooong time..
Java,
As long as Steve is there, complacency probably doesn’t have a chance. Remember, they JUST took the number one selling MP3 player in the world and discontinued it. Just >pop!< and it’s gone, replaced with the Nano. That’s not the act of a complacent company, that’s the act of a company that knows it has to BE ahead to STAY ahead.
My gut feeling? Microsoft has put everyone on notice that either MS or a favored hardware maker is going to be producing the first TRUE iPod killer. They’ve been told either get out of the bizz now or be crushed between the rock of Apple and the hard place of Microsoft. This will be a hardware/software combination that will be “good enough” for many people and will be MS’s last chance to take back the home media mindshare from Apple.
MDN Magic Word — deal
The “deal” has been struck, and it wasn’t with Creative….
another one bites the dust
Sim Wong Hoo has a future at Microsoft as “Chief Delusion Officer”.
Aye! I’ve got it playing right now on my TDK speakers via iTunes ripped from CD @ 192kbps
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We have the plot layed out for you, right next to Rio.
83% of all statistics are made up on the spot…….
Why didn’t we read about this last week when the news item was originally released. I read about it a week ago. I guess MDN was waiting for another slow news day when they could show it’s readers how humorous they are. Not!
Last week it was Australia, this week it’s Singapore. Do I see a trend? Which “exotic” country cops it from MDN on the next slow news day. Come on MDN lift your game. Your advertisers wouldn’t be happy with your ethnically based humour.
P.S. focker, it’s not about being politically correct, it’s more a matter about being decent to others. The MDN bozos haven’t realised this …yet.
Magic word “good” as in good writing.
36% ???
No matter how you look at it, if the article is comparing apples to apples ( no pun intended ), 36% to 14% would mean that Apple is selling some product category ONLY 2.6 times more than Creative. You would definitely have to make up a category that includes a product that Creative makes and not Apple to get such a small ratio (you’d probably also need to exclude most of Apple’s product line too).
The real problem for Creative is figuring out what to do next. They’re a company without a compelling product. They’ve already taken a beating for cheesy sound cards with horrible driver support. That’s why they were so anxious to grab some mp3 player market share, they need something to sell that people want.
Creative has bastardized the Emu brand and milked it for all they can in the musical instrument mfr market. Software based instruments have made Creative (Emu) hardware irrelevent, plus the market is saturated with good products so Creativ’s crap isn’t even on the radar with real musicians.
20 models of little plastic computer speakers priced from $9.99 to $29.99 is not going to save them. This segment is flooded with cheap junk. Cambridge Speaker Works is another American brand they bought and trashed.
THEY’VE GOT NOTHING GOOD TO SELL!
Good bye Creative!
He Hoo got it Wong.
Focker,
I hate people who alsway have to be pc. You’re pathetic. You want flied lice? Fortune cookie?
hi:
Your stats are right according to my own independent study plus or minus 2%. However, only 67% of the readers here believe it. This has been confirmed by MDN Magic Word = written (as in the word is “written”).
Creative needs to stop doing it the WONG WAY!
Him Hoo Wong got to go!
MW: slow (as in Wow MDN is running slow. I guess that server upgrade didn’t work)
In the words of the late, great Al Czervik, “I hear this place is restricted Wong, so don’t tell ’em your Jewish.”
Emax, you’re an idiot!
Believe me, I know music. I know what an Emax is (or was). “They” don’t make their own speakers and their sound cards are JUNK. Apparently you were not ever duped by the Creative Sound Card for the Mac fiasco. Many devoted Mac users layed down $99 (or more) for a sound card that never had working driver support. Creative consistenly blamed Apple but they were always a generation behind the current Mac OS and finally just dropped support after dumping tens of thousands of useless sound cards into the Macintosh market. Mac users tried to embrace Creative and were flat out lied to and screwed hard. That’s Creative – doing it the “Wong way”!