Apple and Creative Technology, Ltd. today announced a broad settlement ending all legal disputes between the two companies. Apple will pay Creative $100 million for a paid-up license to use Creative’s recently awarded patent in all Apple products. Apple can recoup a portion of its payment if Creative is successful in licensing this patent to others. In addition, the companies announced that Creative has joined Apple’s ‘Made for iPod’ program and will be announcing their own iPod accessory products later this year.
“Creative is very fortunate to have been granted this early patent,” said Steve Jobs, Apple’s CEO in the press release. “This settlement resolves all of our differences with Creative, including the five lawsuits currently pending between the companies, and removes the uncertainty and distraction of prolonged litigation.”
“We’re very pleased to have reached an amicable settlement with Apple and to have opened up significant new opportunities for Creative,” said Sim Wong Hoo, chairman and CEO of Creative, in the press release. “Apple has built a huge ecosystem for its iPod and with our upcoming participation in the Made for iPod program we are very excited about this new market opportunity for our speaker systems, our just-introduced line of earphones and headphones, and our future family of X-Fi audio enhancement products. We expect that the one-time licensing payment of $100 million will contribute approximately $.85 of earnings per share to our current quarter, ending September 30, 2006.”
“It was unclear whether Creative would continue to make its own Zen line of digital music players, which compete with the iPod. If so, the move would mark one of the first times that a company had both been a partner and competitor with Apple in the digital music space,” Troy Wolverton reports for TheStreet.com.
Wolverton reports, “Apple spokesman Steve Dowling directed questions about Creative’s plans for the Zen and its iPod accessories to Creative. A Creative representative did not return a call seeking comment.”
“Although Apple will be out $100 million for the license, the company may be getting some of that back. As part of the deal, Creative agreed to return some of that money to Apple if it is successful licensing its patent to other companies,” Wolverton reports. “Apple did not say how the deal might affect its current-quarter results, but the settlement amount is equivalent to about 11 cents a share, given the company’s diluted share count at the end of its most recent quarter.”
Full article here.
[UPDATE: 6:33pm EDT: Added quotes from TheStreet.com.]
And so ends the war, not with a bang, but with a whimper from Apple’s petty cash drawer (or a nice fat check from Creative’s point of view). So, excellent news all around! Many had expected just such a settlement and some – including us, as recently as August 11, 2006, though mostly tongue-in-cheek – had suggested Creative make iPod accessories instead of continuing to bleed money trying to make and sell iPod also-rans. Don’t be too surprised if Creative’s MP3 player-making days soon come to an end; that may have already happened unofficially today.
Oh, yeah: Microsoft had better make sure that their Zune interface doesn’t infringe on Creative’s patent. 
Notes: Apple Computer Inc. continued to lead the U.S. digital music player market in the second quarter with a 75.6% share, according to the NPD Group. Creative was third with 4.3%, following SanDisk’s 9.7%. For its third fiscal quarter ended July 1, 2006, Apple generated $1.954 billion in iPod and iTunes Music Store sales, iPod services, and Apple-branded and third-party iPod accessories.
[UPDATE: 7:12pm EDT: Added Microsoft Zune and Notes portion to the Take.]
Related articles:
Analyst: Apple’s relatively small settlement with Creative removes threat hanging over iPod – August 23, 2006
Beleaguered Creative reports revenue slide – August 11, 2006
How beleaguered Creative got stomped by Apple Computer – July 10, 2006
Apple and beleaguered Creative ‘open’ to settling iPod patent lawsuits – July 06, 2006
Beleaguered Creative on Apple’s lawsuits ‘retaliation’ and patent disputes – June 21, 2006
Beleaguered Creative issues press release: U.S. ITC to investigate Apple iPod for patent infringement – June 14, 2006
Apple plays hardball: files counter-suit against beleaguered Creative in sympathetic Texas court – June 07, 2006
Apple files second lawsuit against beleaguered Creative Technology – June 06, 2006
Apple Computer sues beleaguered Creative for iPod patent infringement – May 18, 2006
Apple suit seen hurting beleaguered Creative in long run – May 17, 2006
Beleaguered Creative’s lawsuit against Apple for alleged iPod patent infringement shows desperation – May 16, 2006
Beleaguered Creative sues Apple for alleged iPod patent infringement – May 15, 2006
Beleaguered Creative Technology circles the bowl – May 02, 2006
Beleaguered Creative Technology reports largest operating loss in at least five years – April 10, 2006
Joke of the Day: Red Herring headline: ‘Creative may be iPod threat’ – February 28, 2006
S&P Equity downgrades Creative Technology, cites ‘increased competition from Apple Computer’ – February 14, 2006
Apple unveils new 1GB iPod nano for $149; iPod shuffle now starting at just $69 – February 07, 2006
Beleaguered Creative reports 95-percent slump in quarterly profit – January 26, 2006
Don’t call them podcasts! Derivative, er, Creative introduces ZenCast app for ‘audio & video blogs’ – January 04, 2006
Creative’s Zen Vision:M green with Apple iPod envy – December 09, 2005
Apple faces prospect of bruising iPod patent dispute from Creative Technology – December 09, 2005
Creative Technology’s official press relase for Zen Vision:M Apple iPod knockoff – December 08, 2005
Creative’s Sim Wong Hoo vows to ‘aggressively pursue’ Apple over iPod patent – December 08, 2005
Creative announces 30GB Zen Vision:M video-enabled ‘iPod killer’ – December 07, 2005
Beleaguered Creative waves white flag, surrenders self-declared MP3 player war to Apple iPod – November 07, 2005
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
Hell..Apple could of bought Creative for $100 million and still have change leftover.
Check off another lawsuit off the list.
Excellent indeed.. now if we can just get all this stock-option ugliness behind us.
Wow! I know Apple has 9 billion in the bank or whatever but I didn’t think they would cough up this kind of cash. Creative must have actually had a real case here for Apple to back down.
On the other hand, it’s sounds like Creative finally wised up and realized, that patent or no, they weren’t going to even make a pinprick in Apple iPod business. So take the money and get in bed with Apple and start cranking out iPod accessories.
I think that the iPod accessories announcement is a sretty strong sign that the Creative is going to drop their own players. Competing in this market is costing them too much in marketing expenses (and inventory writeoffs when the units dont sell)
Steve pulls out the $100M dollar bill from his jeans left little pocket…(the other has his nano in it)…and says, “Let’s move on”…by the way, Steve’s face is on the $100M bill.
I guess they were afraid of litigation going on forever.
I think Apple is being generous here. It gives Creative the chance to make money because after the iPod and the Zune coming up there won’t be much market for them.
creative is the scummiest of all scummy bottom-dwelling companies. I wish it didn’t end with $ in their pocket, they don’t deserve it.
Everyone else will be filing their Lawsuits in short order to get a piece of the iPod fortune.
Apple made a big mistake settling for that much money.
I agree with MDN take. With all the pressure Apple is under with NASDAQ delisting threat (pay attention to this, it’s not nothing), disappointing Intel first edition machinery, and a very, very weak new cat (so far), Apple needs to get some breathing room and work on quality, performance improvements and customer care.
More blood on the click wheel? Blood, not from a fatal blow but a crippling injury…
BOYCOTT CREATIVE
Don’t buy their stuff, they will spend millions of dollars to make absolute junk that will ruin any iPod stuck in them. Creative don’t play nice.
There is a company called 3DLabs which Creative owns, they make awesome and affordable 3D rendering video cards, but won’t make any for Mac’s.
For many years Mac users have begged the company to make cards for Mac’s because rendering on the Mac’s suffered compared to their PC versions.
3DLabs wrote nasty emails back to Mac users telling them to get a Windows PC and that the Mac “was dead” and that the parent company (Creative) hates Apple, see’s them as a competitior and will not associate with Apple or it’s products.
CREATIVE IS NO FRIEND OF MAC USERS.
BOYCOTT CREATIVE
This was a savvy move on the part of his-Jobness. There’s no “moral highground” to be awarded here so, pay Creative royalties, let them make iPod accessories and watch their branded players vanish from the marketplace. This is win win as far as I can tell. Hopefully we’ll see some cool accessories come out of Creative’s camp and Apple can focus on the next generation of kick ass stuff.
Well I guess Creative has to make money somehow. Obviously, it’s not through the sales channel.
Nobody hands out 100 million unless they think that the other guy has a solid claim and that they’re going to loose.
Wow, I’m shocked that Apple paid so much! In fact, I’m shocked Apple paid at all! I thought that Apple had a strong case that heirarchical menus applied to music players was not a patentable process.
I guess that works out to $2 an iPod. Pretty sweet deal for Creative, seems to me.
SWH of Creative is one lucky SOB!
Sorry to disagree with your take Pete, but I haven’t encountered any sort of groundswell of support for your contentions of “disappointing Intel first edition machinery”, or “a very, very weak new cat”.
Seems like it was very recently that I read an article suggesting that Apple can’t meet demand on the Macbook, in fact.
I’ve also read some fairly positive articles about what Apple (appears) to be readying with Leopard.
Also works out at about 12 cents per Apple share.
Hmmmm. Both side of the thought have merit. But . .
” width=”19″ height=”19″ alt=”grin” style=”border:0;” />
The lawsuit is done.
All apples for all time have NO issue.
Creative just jumped into the Apple camp. Maybe a sign of things to come as MS plays so dirty.
100 million is not so much when its used to decrease your TAX burden.
Looks like the next year will be an interesting place.
” width=”19″ height=”19″ alt=”grin” style=”border:0;” />
N.
Steve was quoted as saying Creative was very lucky to have that patent… It’s about the only thing that’ll save their arses. I love the tie-in to licensing – if Creative issues licenses on their patent, then the settlement is reduced. Rather interesting. Almost suggestive that the patent really is hooey. I wonder how many licenses they’ll get at Creative?… Anyone who licenses is essentially a competator of Creative more directly than Apple. What a chess game!
Seems like Creative is eating lots of sand, lately…
From Beleaguered Creative reports revenue slide – August 11, 2006:
MacDailyNews Take: For those counting, the word “loss” was used in beleaguered Creative’s earning press release was used one dozen times. Craig McHugh, beleaguered Creative’s president also states in the press release, “we are targeting our return to profitability by the end of this calendar year and continued profitability going forward.” McHugh should go into comedy full-time. Return to profitability? Yeah, if you forget about MP3 players and start making iPod accessories, maybe.
Seems like the $100M is funding Creative’s R&D into iPod accessories of which Apple gets a cut…
Checkmate!
Holy crap that’s a lot of money.
This was on Apple Press Release at the bottom.
“About Creative
Creative (NASDAQ: CREAF) is a worldwide leader in digital entertainment products for PC users. Famous for its Sound Blaster sound cards and for launching the multimedia revolution, Creative is now driving digital entertainment on the PC platform with products like its highly acclaimed ZENª MP3 players. Creative’s innovative hardware, proprietary technology, applications and services leverage the Internet, enabling consumers to experience high-quality digital entertainment — anytime, anywhere.”
“highly acclaimed”. Since when did apple praise a competitors product. I’m with “creativebasher”. I have always boycotted their products.
“Steve’s face is on the $100M bill.”
Actually, it’s not his face which makes it MUCH more funny. There’s also a cryptic motto under the picture, “YCKSJA.” The watermark features Mike Markkula.
and the stupid IP patent system continues to reap the rewards for the litigators. lovely. not!
Gil,
That’s just Creative’s standard boilerplate for press releases. Apple’s didn’t praise Creative. That’s just Creative praising themselves.
Hmmmmm,
I just had this very WEIRD thought.
Apple paid the Beatles 100 Million and later, the Beatles can’t touch Apple and iTunes due to the wording of the settlement.
Apple sold Microsoft 150 million in stock and gave up the desk top looks war. Recently Apple runs Windows on a Mac and Microsoft says nothing. Wording of the settlement again. ?????
I don’t know, but there sure is a weird connection.
” width=”19″ height=”19″ alt=”grin” style=”border:0;” />
N.
CreativeLicense said:
“if Creative issues licenses on their patent, then the settlement is reduced. Rather interesting. Almost suggestive that the patent really is hooey. I wonder how many licenses they’ll get at Creative?… Anyone who licenses is essentially a competator of Creative more directly than Apple.”
I have to wonder if Steve is goading them to pursue more lawsuits. If they can sue others into paying them licensing fees, they will spend part of $100M in legal fees, thus reducing their profits from the agreement. If they win, Apple gets even more of that settlement money back, further decreasing their profit from Apple. Not to mention this will distract Creative from actuall doing anything competitive (not that they really could) against the iPod. Their induction into the Made for iPod program makes perfect sense as it is the only way they will make MP3 money. If you make money on something, you also have a vested interest in making sure it stays around.
All in all, this seems like a very smart move on the part of Apple and that Steve is thinking several steps ahead, not just about the money right now. Go Steve!
OUch!!! 100,000,000 ouches.
Apple loses big.
Time to focus on The Beatles’ lawsuit.
Everybody wants a piece of Apple.
That Apple even gave a dime to these crooks makes me want to vomit.
“Time to focus on The Beatles’ lawsuit.”
The one that was tossed out of court?
Microsoft’s ZUNE interface appears to be very similar to iPod and Creative’s patent.
Steve Jobs could be getting his US$100 million back sooner than some think!
So…I guess that now, MS and the Zune will have to pay a licensing fee to Creative for their menu system too, huh? It should be apparent that there is only one way to navigate anything reasonably, and that is as a hierarchical structure. Any fool can see that, except those in the patent office. Its getting really tiresome seeing everyone trying to patent the obvious. I feel like were drowning in legalism. Help!
For its third fiscal quarter ended July 1, 2006, Apple generated $1.954 billion in iPod and iTunes Music Store sales, iPod services, and Apple-branded and third-party iPod accessories.
That’s $1.954 billion in just a 90-day period.
$100 million is a drop in the bucket for Apple.
MDN MW: “price” – how do they do that?!
The only better news would be that apple won the lawsuit. But between saved litigation costs and the avoided potential damages this is a 100% win for AAPL Investors such as myself.
MDN: My stock in apple will be “greater” than I bought it for for a long time.
The settlement has rather interesting timing since the Zune is going to be selling soon and, as StooMonster mentioned, it does have a very similar hierarchical interface… Maybe they have some plan of stopping the Zune from even coming to market or forcing MS to license the interface to Creative (and hence partially to Apple). That would be an ingenious plan for both Apple and Creative, but more so to Apple.
this means….iPod updates coming very fast and soon….with this behind Apple, my guess is that what ever plans they had for future iPod’s can now set sail….next up “ZUNE” (Dead Man Walking)
“That’s $1.954 billion in just a 90-day period.
$100 million is a drop in the bucket for Apple.”
You’re confused about the difference between revenue and profit.
The 100 million comes straight off the bottom line.
So Creative got about 1/4 of Apple’s total profit for last quarter.
“100% win for AAPL Investors such as myself. “
No, it’s a loss of $0.12/share. But you may be right. had the case gone to it’s conclusion, you could have lost more.
Some of you people are idiots. Do you not realize that Apple has almost $9 BILLION in cash on hand?!? For Apple to give Creative a mere $100 million dollars is like you or I tossing a Quarter into a fountain at the mall!! It’s absolutely nothing, plus Creative now has to pay Apple licensing fees for making iPod accessories. This was an absolutely brilliant move on Jobs’ part.
Watch for all Creative Zen mp3 players to be suddenly discontinued between now and the upcoming holiday season as well…
I’m not sure that this point has been made clearly enough, but…
By licensing the patent Apple helps to validate it.
With a stonger defense of the patent in place and a war chest for legal costs, Creative can seek to enforce the patent against anyone else in the industry that infringes (which should be just about everyone).
The chances that anyone else can beat the patent in court are slim to none based on past hisotry.
Apple wins twice every time Creative goes after a competitor. First life gets harder for the competition (and more expensive whether they fight or license). Second, Apple shares in a slice of the pie if they license.
In effect, Apple has “bought” this patent (or at least a share in it) and it now becomes one of Apple’s weapons as well.
As pointed out by previous commenters StooMonster and RePlay, do not be surprised if one of the first targets is Microsoft — just add another $100 million to the launch costs (losses) of the doomed Zune. I am sure that Sony and SanDisk are not far down on the list either.
This is an unqualified brilliant move by Apple that further locks up the mp3 player market for themselves and builds yet another barrier to entry for the competition.
canis.major….
you got it! Apple bought this patent for $100 million.
They will slap Zune.
Funny thing is M$ Zune entry is probably what caused Creative to settle.
Now we know why Steve looked “sick” at WWDC keynote. They were probably working out this settlement then. It’s not the money, I’m sure, it’s just the priciple of handing it over to that loud-mouth Sim Hoo.
SirROM, you beat me to it. This settlement seems to be a way for Apple to indirectly sic Creative on the iPod’s other would be “iPod Killers.” Clever, isn’t it? Apple keeps out of harm’s way — from the anti-trust shysters — by allowing its paid for bitch to attack Apple’s wanabee competitors. Brilliant, Steve, just brilliant.
This is actually a great win for Apple. They pat out to Creative but have aalso locked-in Creative and locked out the competition.
Creative can sue anyone, like M$, now and win damages but it won’t be intheir interest to offer the same deal that Apple gets as they would have to pay Apple back.
So Creative sues X; Wins damages; collects royalties; X has paid out to creative but can no longer use heirarchical menus in their player.
As Creative will be making a pile as an iPod accessory maker it’s also not in their interest to license the menus to any other player. The iPod has 75% of the market so who’s bed would they rather be in?
Win for Apple as competition can’t use the same or similar iPod interface. iPod stays unique. Creative makes money, unfortunately but it’s the price we pay to screw the competitors in the player market.
Apple admits guilt, pays a huge fine, and they are lauded for their brilliance in here.
LOL
smartguy wrote: “creative is the scummiest of all scummy bottom-dwelling companies. I wish it didn’t end with $ in their pocket, they don’t deserve it.”
Wrong. Lawyers dwell lower. A bunch of lawsuits could easily consume such amount and lawyers would be the only winners.
Excuse the typos in my post above. Trying to type too quickly. And not re-reading before I post. Bad.
Uh, excuse me, but $100m is still a lot of money. When you consider how “tight” Apple is with advertising dollars, keep in mind that that coin could have purchased a lot commercials that actually advertised what Mac OS X is and looks like.
/bored with PC and Mac guy ads
New headline:
Creative gets $100 Million welfare check from Apple
Creative Tech will recieve a $100 million dollar corporate welfare check from Apple and a mandatory re-training program in Apple accessories sweatshop in central China.
After stamping “Made For iPod” logos on million of iPod accessories, Creative is to pay the $100 million back to Apple is small incremental payments in the form of fee’s to use the “Made for iPod” logo on anything they sell.
If Creative earns any other income during this time, by licensing their patent to others like Microsoft, it’s to be applied to the $100 million debt to Apple.
So basically if Creative decides to change corporate welfare providers, namely from Apple to Microsoft, then Creative needs to pay off Apple first before using Microsoft welfare payments for it’s own use.
Creative has been thrilled to avoid bankruptcy from their failed buisness practices and leveraged the only chip they had to recieve the handout.
Does Apple have to pay anything to Creative going forward for the use of this patent? Didn’t see it mentioned in the PR so I assume not. But would like to know for sure.
No price cuts for iPods this year….
And if the lawsuit verdict had been the other way around 99% of the people here would be calling Creative names for stealing ideas and lauding Apple´s brilliance….
And that´s why this site has zero credibility.
The Boss,
MDN has no credibility? WTF are you talking about?
MDN said on August 11, 2006: For those counting, the word “loss” was used in beleaguered Creative’s earning press release was used one dozen times. Craig McHugh, beleaguered Creative’s president also states in the press release, “we are targeting our return to profitability by the end of this calendar year and continued profitability going forward.” McHugh should go into comedy full-time. Return to profitability? Yeah, if you forget about MP3 players and start making iPod accessories, maybe.
http://www.macdailynews.com/index.php/weblog/comments/beleaguered_creative_reports_revenue_slide/
You must have meant: some of the readers who post comments have no credibility. MDN is entirely credible.
> “Apple admits guilt, pays a huge fine, and they are lauded for their brilliance in here. LOL”
I second that LOL. Absolutely unbelieveable what some people can spin.
What about that text exemplifies credibility? It’s a quote bookended by two smart ass comments.
montex,
Why do you care of Apple advertises OS X to average PC users? What difference will it really make? OS X is already great. Enjoy it.
Ran this part of the atricle through my translation widget converting English to Jobs Speak:
“Creative is very fortunate to have been granted this early patent,” said Steve Jobs, Apple’s CEO in the press release. “This settlement resolves all of our differences with Creative, including the five lawsuits currently pending between the companies, and removes the uncertainty and distraction of prolonged litigation.”
<u>Translation</u>: I am fscking mad as hell, and will personally see to it that the Apple legal team responsible never finds a job on this planet again. If I could kill Sim Wong Hoo and get away with it, I would.
going forward;
from the third paragraph in the story above:
“We expect that the one-time licensing payment of $100 million. . . “
So no more payments to Creative from Apple in future. Apple will just be making collections from Creative in Made for iPod license fees.
That is a cheap price for the buyout of the patent with no more payments necessary – that is a hell of a deal. Creative is screwed again – they should of held out for recurring payments – Apple Wins Big on this one..
“priciple of handing it over to that loud-mouth Sim Hoo.”
I’ts probably the pain of having to admit that Creative invented the iPod…
i don’t really know how to feel out this.
on one hand, it may well have been a very clever strategic move; Apple certainly do have bigger fish to fry right now (sorting out their Options accounting… oh and some 6th gen iPods please) and the costs and possible bad-guy PR from months of legal action wouldn’t have been terribly desirable.
indeed, Steve may have learnt one thing finally from Bill Gates (or at least ‘Pirates of Silicon Valley’) – “keep your friends close and your enemies closer”. if by helping Creative (a) stay alive and (b) become an iPod accessory maker means they lose interest in trying to compete with the iPod and instead simply help to sell them (both through their accessories and Made for iPod royalities), then just perhaps as one poster said earlier – checkmate.
that said, no-one pays $100M just to shut someone up. $1M yeah, perhaps, but not $100M. Creative was obviously in the stronger position after all. the irony is that while Creative may have been “right”, it didn’t appear to me that they had the resources to put up the proper fight to prove it… realistically Apple could have kept them in court and drained them into bankruptcy, if they really wanted to. or, better yet, drained them just for a bit, bought Creative outright for some lowly figure, claimed the patent and buried what was left in a landfill in Utah next to a bunch of rusting Lisas…
” width=”19″ height=”19″ alt=”wink” style=”border:0;” /> ok, maybe not.
perhaps the key factor was the risk that Microsoft might have come to Creative, given then a tonne of cash to licence the patent for use with the Zune first, in an attempt to legitimise Creative’s claim and try to corner Apple in the process, a la SCO vs Linux?
How the hell did apple lose this one?
Make a Finder window in Column View (close the sidebar) show only one column, make the window about the size and shape of an iPod window.
Go to your music folder.
Click through the subfolders.
Yes, that’s right, the arrow and the sliding column effect is the same as the iPod.
Mac OS X is directly based on NeXT. NeXT’s File Viewer is the basis for the iPod interface.
Fukkin lawyers….
for any reading all the posts: lol 3
This seems like MS paying Apple a while ago, doesn’t it?
Zen, Zune, i’m confused?
First on the list of things Creative will have “Made for iPod” is what few customers they have.
Also, I just read where Hezbollah claims it won this settlement.
I’m very skeptical about the ‘now we’re going to make iPod accessories’ part of this agreement. I think it was tacked on at the end to make Apple feel better about giving up the millions, that’s all. They have no intentions of making shit for iPods. They are going to wait on the Zune platform and drop this license right away because (you guessed it) Apple’s market share is too small, and leave it at that. Remember, the entire Wintel market longs for the old world order, the one in which Apple stays in its ghetto where they all think it belongs. They believe that as goes the iPod so goes Apple, and if can be brought down, well…
Apple admits guilt? Clearly you have have no idea how the law works or what a settlement means. Go back to getting Vista out and stop trolling.
By Apple coceding, the courts have no excuse but to recognize Creative as owning the legal right to the patent. It kills the “Monopoly” claims that MS did with IE. Syeve paid Parc too, now thry’re just a footnote in history. MS stole DOS by paying for it to be backwards engineered, they ben stealing from Next and Apple forever. Apple is the classier of the two. Steve is a chess player, don’t look at the pawn that was lost but at what that loss just secured them.
Sorry about the typos.
Steven Paul Jobs is a fscking genius.
But, that’s been obvious to most for quite a long time now.
There is a vested interest for Creative and others to punch M$ in the nuts. This is a good thing for Apple, even if the price tag seems high.
Also, what would Jobs do in public, sound gleeful? If he’s as good as everyone thinks he is (and he is), his public distress masks the satisfaction that comes from playing cards well. Is $0 better than $100,000,000? Absolutely. But anyone who plays strategy knows that in order to win, sometimes you have to lose.
Though many don’t see it: Touche’.
” width=”19″ height=”19″ alt=”surprised” style=”border:0;” />
Steve Jobs vs. Sim Wong Hoo. Hardly a fair fight.
Steve: “Sim, this is the cleaners.”
Sim: “Thanks for taking me to them, Steve.”
MarketGuru gets it, at least.
Come on guys, let’s see it as it is. This is more like,
“Cupertino, start your copy machines”
Obviously Apple’s not immune from copying things every once in a while, so let’s not be too smug. After all, the original Mac interface was taken from Xerox (I still have my original 128k Mac from the early 80’s)
Love my Ipod and Powerbook, though.
>>>Zen, Zune, i’m confused?<<<
Zen + Zire = Zune
“hey are going to wait on the Zune platform and drop this license right away because (you guessed it) Apple’s market share is too small, and leave it at that.”
Sorry, douche, the OS market share has nothing to do with this. Good try though, douche. Further, Creative is going to spend $ to prop up Zune so that MS can beat Apple? Right. In the absence of Zune, Creative would love iPod market share to be hacked so that Zen could be competitive. However, the idea that Creative would rather bide their time waiting for Zune to kill off iPod, THEN make $ is without merit.
“fukkin lawyers”
Actually, you can blame the people that wrote the laws. Lawyers merely abide by those rules.
L,
You are misinformed. Read it from those that were there:
On Xerox, Apple and Progress – by Bruce Horn
Creative’s patent is bogus – the Mac had similar menus before Creative even existed – but Steve Jobs avoided a drawn out legal fight and instead smartly set up the winning move today by sacrificing nothing but a measly pawn.
Very interesting article – thanks for the reference, Michael. However, I don’t think it proves your point. It seems to me, the basic windowing paradigm used in the Mac would never have existed if it hadn’t been seen at Xerox Parc. Of course there would be some differences, but the windows and the mouse were the kick off points. So Apple “stood on the shoulders of giants”.
This brought back memories, though. I used to sell the Lisa in a computer retail store in the early 80’s. We also sold the original IBM PC. I can tell you that when it was quiet in the store, I could not spend enough time playing with that remarkable machine and it’s incredible operating system. It made other computers seem archaic.
When the first Mac was announced, I found out I could get an employee discount and buy one for $1000. I did, and I still have the 128k Mac.
I will never buy a product from Creative. Ever.
J
Cpt. Obvious says:
“Apple admits guilt, pays a huge fine, and they are lauded for their brilliance in here.”
Apple did not admit guilt, they settled out of court, there is a big difference.
Keep your friends close and your enemies closer
Might be exactly what Apple is doing.
Notice how Apple sells that defunct OfficeMac and Symantec AV software right next to shiny new Macs?
Next there will be Creative Zens next to the iPods in Apple Stores.
Steve Jobs must need something to make his iPods look even better.
@Douche donkey
It’s my belief that Creative has given up on the Zen player. The iPod has all but killed it and Zune player is going to put it out of its misery for good, and they’ve got know this already. Creative is going to make their money in the digital music market now by leveraging this patent and selling accessories for other players. Like all of the traditional Wintel market they ARE going to support MS’s Zune platform and you’d better believe it. Why? Because of the iPod’s infamous halo effect, and the fact that it’s helping to grow APPLE’S OS MARKET SHARE, that’s why. I previously mentioned Apple’s market share sarcastically, as it’s always one of the cheesy reasons most Wintel based companies use to drop Mac support or in this case support for an Apple device. In the long run from the Wintel perspective, doing whatever it takes (yes, even losing $) to kill off the iPod has everything to do with OS market share.
Wow, talk about a lot of trolling, ignorance, or just plain lack of perspective on this board. Let’s tackle some of the issues here
1) Apple lost because $100 million is a lot of money![/b[
Wrong. $100 million may be a lot of money to you or me, but to a corporation the size of Apple, it literally is a drop in the bucket. Apple has $10 BILLION in cash. That money is not squirred under Steve Jobs bed!
Apple actually has set up a pseudo-corp in Nevada whose only task is to manage Apple’s cash. Meaning, Apple invests that money in various financial vehicles that can be quickly liquidated if necessary, but while working is designed to produce a return on the investment.
If Apple simply stuck all that money in a regular old savings account, at a decen interest rate of 3% a year, Apple makes $300 million a year on interest alone.
$100 million is a drop in the bucket for Apple.
2) Apple lost because the licensing the patent validates Creative’s patents!
Yes, Apple paying money to license Creative’s patents does in fact validate the patents, or at least give them more validity in the courts.
However, saying Apple “lost” is taking the short-sighted view. First of all, settling with Creative removes one more cloud of uncertainty. That’s something investors love, because uncertainty is the bane of all stocks.
Secondly, by strengthening Creative’s hand, Apple has now insured that Creative can go after all the other iPod competitors out there. That means Sandisk. That means iRiver. Most importantly, it means Creative can probably go after Microsoft’s Zune and extract big payments.
This is clearly what Apple had in mind, since the deal somehow involves Apple getting some if not all of its settlement money back if Creative successfully extracts licensing payment from other parties.
For those of you who still need it spelled out, it’s very possible that Microsoft will be paying Creative, and Creative in turn will be paying Apple. In other words, Microsoft will be paying Apple for Zune. How devious is that?
3. Apple lost because settling = losing or settling = admitting guilt!
Wrong. This has nothing to do about “guilt.” The agreement doesn’t even go there at all. All it says is that there are no more legal disputes over the patents, and both sides are happy now and the best of friends.
With Creative now on board to make iPod accessories, the choices should be crystal clear for Creative. They can continue making money-losing “iPod killers” or spend the time sicing a few lawyers to collecting $100 million payments here, there, everywhere.
They can also devote their R&D budget producing low-cost but high-margin iPod accessories. I’m willing to bet the sales of iPod accessories will soon exceed the revenue of Creative music players, and Zen will probably go the way of the Dell Ditty before long.
4. So if Apple really won, why did they have to settle at all?!
My guess is that Apple’s lawyers basically spoke the hard truth to Creative’s lawyers: “One, we can take this to its natural conclusion and spend the next 5 years making your life hell. You know how thorough we are with the discovery process. How much is that going to cost you over the next few years? $10 million? $20 million? $50 million or more? And meanwhile, at the end of it all, you have a chance to lose it all. Do you want to literally go all in when all you have is a pair of nines versus the nice hand I’m showing?”
“Or two, we can settle this right now. You get a big cash infusion at a time when Microsoft is making a loud noisy moves to kill your company by Christmas with Zune. With this settlement, you now get to sue Microsoft because now we’re slipping you another nine. Suddenly you have a 3-of-a-kind instead of a pair. In return, you can scratch our backs to by splitting whatever earnings you get from this clueless Microsoft guy.”
Basically, Apple probably told Creative that with Zune’s launch imminent, it wouldn’t last the 5 or so years necessary to see the court battle to its conclusion. Creative prudently saw the writing on the wall, and just bought itself a lifeline.
Sheer brilliant jujitsu on Apple’s part!
I think you got it right.
The most important thing here is that Creative now has the case to go and sue every other MP3 player manufacturer in the world. That is, every other possible manufacturer in the world will end up to have to pay fees to Apple and Creative patent.
“Play for Sure” suddenly is now countered by “Made for iPod”.
Apple paid very cheaply what could become a huge HUGE foothold in the all music player industry.
NewType,
I like your reasoning. Apple makes very smart business decisions these days. And Creative may actually start to make money.
Just to agree with NewType: If Apple really was “caving”, the settlement wouldn’t have such generous terms for Apple. The settlement would have been bigger, it would not have been one-time, and this (frankly amazing) provision that Apple gets a cut of future license fees wouldn’t be there. This settlement was clearly Apple’s idea, on Apple’s terms. Creative caved, and is being paid generously to do so.
What’s really amusing is how this patent can now be turned against Microsoft. It’s ironic, because Microsoft used a nearly identical strategy to cripple the PlayStation 3. When Immersion sued them for the vibration technology in the XBox controller, Microsoft settled, giving Immersion a big cash infusion for their battle with Sony.
Errrrr apple accessories designed by Klingon? I don’t think so. So lame, they lost in the market and the best thing they did was filing a lawsuit? Desperate measures, not so creative one though.
Pre Settlement Mac Zealot opinion.
There’s nothing to the lawsuit, Apple is right. Apple invented the iPod. Creative’s claim is weak. Apple will Crush Creative. Steve will never surrender. We will never settle. We will continue in court until they have no will or means to fight left. We will grind them into the dust. Creative is history.
After Apple implicitly admits there might be something to this by paying money opinions.
This is a brilliant tactical move by Steve getting sued by Creative then settling. 100 million isn’t a lot of money, Steve was a tactical genius in arranging this. Creative owns the UI design patent. Their claim is strong. They can now enforce their rights against other people.
Uhm, I think a lot of people are ignoring the point that MDN ain’t a collective. Me? I thought that Apple had a strong case and would not lose. However, like most people here, I don’t know the nitty-gritty details. Apple chose to settle out of court, which does not imply admission of guilt. Is that the path I would have chosen? No. But, given that Apple did choose it, what benefits does it bring them? I can see the ways it would work out to their advantage, as many other commentors have already pointed out. So does that make me a Mac zombie? I don’t think so. However, facile analysis makes you a troll.
So if the Apple Store at the mall near me is sold out of the iPod accessory I want to buy, and Best Buy is sold out of it, and Circuit City, and Radio Shack, I can now see if they have it at Cambridge SoundWorks.
As I recall it was the small Rio players that creative had on the market first – not anything called Zen.
Creative were first to market but how many times do we see those with the original idea not able to see the full potential and ultimately being squashed by the competition.
Hey, “Creative” — What a wonderful job of picking and choosing opinions to create the illusion of inconsistency. Kind of like “Liberals want to legalize marijuana, but they want to outlaw tobacco!” Those are two different groups. Find me ONE INDIVIDUAL who has expressed both opinions, then we’ll talk.
I still think Apple would have won if they continued to fight, maybe outright, maybe simply by outlasting the competition. One thing that I have always said is that Creative didn’t have the resources to see this through to the end, not with the losses they were suffering annually. Apple saw an opening to get a settlement on terms generous to Apple.
For the ones who still don’t understand this, here are the events in chronological order, stated in layman’s terms:
– iPod (Apple) is wildly successful, makes billions of dollars.
– Zen (Creative) is not, loses millions of dollars.
– Creative has handy digital audio device patent, that we now know had legal clout, leverages it against Apple.
– Apple doesn’t want to fight a long legal battle with Creative (essentially bankrupting Creative) and decides to instead lend credibility to the patent and let Creative handle the legal angle of the upcoming battle with Zune.
– Apple hands Creative a nice check for $100M, bankrolling any future licensing disputes that Creative will undertake with companies such as Sandisk, iRiver, and Microsoft, and funding Creative’s new iPod accessory business. The brilliant part of this is that Apple benefits from any licenses granted by Creative AND from Creative making iPod accessories.
– Creative quietly discontinues non-profitable Zen line of MP3 players.
In short, Apple has executed a brilliant coup in the digital audio space, ensuring future viability and profits with less competition. What surprises me here is the fact that Creative’s patent actually held any validity. I was of the same assumption that many other readers were, that Apple possessed prior art to the Creative patent in the Mac OS X column view inherited from NeXT. As we now see, this must have been a non-informed opinion on the patent, as (admittedly) none of us has actually seen or read it. So now, instead of being the enemy, Creative has become Apple’s legal department in the area of the iPod UI. Apple will not have to fight Microsoft in court over the UI of Zune, Creative will do it for them, and if Creative wins, Apple gets a cut of the profits.
Creative was going to go bankrupt shortly if it continued on its current business model. The Zen was losing heaps of money, and none of Creative’s other ventures were profitable enough to keep the company in the black. Therefore, what Apple has done is provided Creative with a profitable area in which to conduct business: The iPod accessory market. Creative will return to profitability, selling iPod accessories that benefit both it AND Apple, and defending its digital audio player patent that again, benefits both it AND Apple.
I do not see a way that this could be any more brilliant on Apple’s part. It is infinitely more business-savvy than simply bankrupting Creative.
–mAc
What again, is that company called that infringes upon others’ patents or blatantly steals their ideas, gets sued for it and then laughingly pays the fine/settlement because at the end of the day they made shiploads of money from the stolen technology and that gets bashed for that on a macdaily basis?
You guessed it.
Hypocricy, you gotta love it.
I’ve always been impressed with the Zen that Creative makes. My daughters friends have commented they wish they had one as they can’t play, trade or share a lot of music that she can run on her Zen with no problem. There are a lot of kids out there that can’t afford to buy music and would love to have a Zen that allows them to play anything they want. Also with the 30 gig HD she can use it for taking homework back and forth to school. I sure if Apple had it’s way they will shut this product down.