Apple and Creative Technology, Ltd. yesterday 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.
“The first major player to the mass market with a successful MP3 payer was the Rio from Diamond Multimedia in 1998, Creative didn’t enter the market until the following year… It was only later when Apple entered the player market that the products went mainstream and effectively set the ‘gold standard’ for players,” The Business News Source reports. “Apple has often been involved in high profile litigation cases and has a reputation for effectively fighting to the bitter end. So why did Apple roll over so willingly in this case?”
“The outcome of the agreement seems to have benefited everyone to some degree. For Creative there is the massive one off injection of $100mn, with the potential of more to come from Microsoft if their new Zune product is a success. Creative have been losing market share and will now be part of Apple’s ‘Made for iPod’ programme, which indicated that Creative sees a bigger revenue potential from the ‘halo’ products sitting around the iPod,” The Business News Source reports.
“For Apple the cost is not small, but will not make a massive dent in the overall numbers, in the last set of figures produced by Apple (Q306) iPod sales accounted for 45 percent of revenue – Apple has a cash pile of $9.2bn. So the chance to convert another foe to friend and establish yet another contributor to the ‘halo’ is good news. In effect Apple’s iPod is now such a standard that the only area to join if you’re looking to get into the MP3 market – is as an iPod peripheral maker,” The Business News Source reports. “Any ongoing litigation would ‘ muddy the waters’ – at least a clear message has come out of this litigation, to its partners in the ‘add on’ business – Apple is the clear winner and even the competition have acknowledged this by becoming part of the ‘family.'”
Full article here.
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