“Like the proverbial cat that swallowed the canary, Creative Technology Chief Executive Sim Wong Hoo is smiling, and nobody’s quite sure why,” Rachel Rosmarin reports for Forbes.
“‘Creative thought they were going to get a piece of all iPods sold for the foreseeable future—that would cross the multi-billion dollar mark,’ says Rob Enderle, principal analyst at the Enderle Group. ‘And had they been successful, even temporarily, the decline in Apple’s stock would have been catastrophic.’ Instead, Apple can continue making and profiting from the market-leading iPod, and Creative earns the dubious honor of partnering with Apple to make matching accessories, such as speaker systems and head phones. Creative will continue to make and sell new models of its Zen MP3 player, according to a company representative,” Rosmarin reports.
“The Apple ‘Made for iPod’ program is no sweet deal, either. Apple takes an approximately 10% cut of wholesale prices on sales of the peripheral devices, and the market is already crowded,” Rosmarin reports. “Creative is not a major player in the audio player accessory market—especially not in marketing and promoting products for other companies’ devices. Why was Hoo so eager to take the accessories deal instead of more cash?”
Rosmarin reports, “There must be something somebody’s not talking about, says Enderle. ‘I think Apple offered Creative something that gives them a competitive advantage–an incentive–in this space. Nobody has said what that is.’ A Creative representative said the terms of the ‘Made for iPod’ agreement are confidential. If Creative isn’t getting a perk or two out of this settlement, Hoo’s comment describing the deal as ‘amicable,’ would sound strangely docile for the man who once declared an MP3 player war against Apple with a $100 million marketing campaign and called the iPod Shuffle ‘worse than the cheapest Chinese player.'”
Full article here.
[Thanks to MacDailyNews Reader “Clarus” for the heads up.]
Sim Wong Hoo is smiling because he’s a wild and crazy guy, that’s why.
Related articles:
Apple and Creative settle – the bigger picture – August 24, 2006
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Apple & Creative settle: Apple pays $100M for ‘Zen’ patent, Creative plans iPod accessories – August 23, 2006
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How beleaguered Creative got stomped by Apple Computer – July 10, 2006
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Apple files second lawsuit against beleaguered Creative Technology – June 06, 2006
Apple Computer sues beleaguered Creative for iPod patent infringement – May 18, 2006
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In other news, Creative says they will continue to repeatedly bash their heads against brick walls.
I think calling Hoo a wild and crazy guy is an insult to real wild and crazy guys, like the two czech brothers. Steve Martin is offended.
What they don’t say is for how long they plan to continue making new mp3 player models…
OK, when is the Zen going under? Any takers? Late 2007? Will it even last that long?
Hey, if someone gave me $100 million dollars, I know I’d be smiling!
Hoo is happy because he got his $100 mil back for the unsuccessful iPod war.
Now he can try again (but I think he has better than even odds to lose the $100 mil all over again)
Maybe he cut a deal to license Fairplay to them when the time is right
Apple should license fairplay AAC to creative – that would get the Netherlands and France off it’s back, and strengthen it’s position vs. Microsoft Zune.
Then maybe hp could license a zen model of their own…
That’s right folks, Creative was gunning for a piece of each iPod ever sold. And they settled for a measley $100 million. Explain again how Apple can possibly be seen as the loser of this battle?
Just asking, But isn’t ‘Clarus’ the name of the dogcow? Hence Apple spun off the Claris software company lo many years ago?
And answered – via google – here:
http://clarus.chez-alice.fr/ENGLISH/history.html
zealot,
The official Apple Clarus dogcow technote is here:
http://developer.apple.com/technotes/tn/tn1031.html
http://en.wikipedia.org/wiki/Moof
Note that MS copied Clarus for Powerpoint according to the Wikipedia article.
Wow, MDN Takes are weak today. Get enough sleep?
Every time I see Enderle quoted and labeled “principal analyst at the Enderle Group” it makes me want to throw up. Why? Cause he’s the ONLY analyst at the Enderle Group, and I use the term “analyst” very very loosely. He’s also the window washer and chauffeur, cause he’s the only one who works there (we’re not counting his wife who is supposedly also on the payroll – cause my girlfriend is on my payroll too and I know what she does. Hey, no jokes, ok?) When I see a news source quote Enderle it just kills any credibility they may have already had.
“Creative will continue to make and sell new models of its Zen MP3 player, according to a company representative,” Rosmarin reports.
I think there was a typo: that should have been “Creative will continue to make and NOT sell new models of its Zen MP3 player, according to a company representative.”
Steve Jobs and Apple are going to licence FairPlay to Creative once Microsoft ZUNE is at retail.
That’s why he’s smiling.
Hoo just got a $100 million check and is being allowed into the lucrative iPod accessory game. That’s probably much more profit than he will make selling Zen players. He had to announce that the Zen was still for sale and that Creative would still produce it; the player is still on store shelves and MS Zune disaster hasn’t been released yet. Wait for the press release in 6-9 months that the Zen is being discontinued.
Also expect, in about that same timeframe, that Creative may be added as a manufacturer for iPods. Apple is already searching for a third laptop manufacturer, and as iPod sales continue to climb, Apple will need more manufacturing partners to keep up with demand. Thus, Hoo is smiling because his company is saved for the time being, with the promise of future work with the industry’s juggernaut.
MDN – where is the Sim Wong Hoo file photo?
Zen… Zune… Zen… Zune…
ZZZZ…
So let’s look into the future. Zune is about to launch and guess what? Apple decides to license FairPlay to all those MP3 manufacturers that just got screwed by MS. Maybe Sim Wong Hoo is smiling because that was part of this deal.
What I’d like to know is, is the “ompetitive advantage–an incentive–in this space” due to this agreement that Creative be able to make it’s Zen players compatible with iPod accessories? Will the new Zen come with an iPod compatible dock? Wanna kill off the Zune and SanDisk, they’d be dead in the water if Creative players could use all iPod accessories.
The incentive is Hoo can sue cellphone makers now, with a legal precedent in his pocket. That’s where the money is, cause they sell way more music-capable devices with heirarchical menus than does Apple. Steve just gave Hoo a license to print money.
ENderles insane. He mentions a ‘perk’ that must exist for this deal to have been made.
(Besides 100 mil in cash)
And then says, ‘no one knows what it is’…
OF COURSE NO ONE KNOWS YOU NUTJOB, YOU JUST PULLED IT OUT OF YOUR ASS!
Face it, that’s the deal: Creative bought some time (they’ll die a little slower) , and Apple gets another iPod partner.