“Creative Technology Ltd., the maker of Nomad and Zen MP3 players, said on Friday its quarterly net profit plunged a worse-than-expected 72 percent, as competition with larger rival Apple Computer Inc. squeezed margins,” Reuters reports. “‘Creative’s results were very disappointing,’ said Kim Eng Securities analyst Dharmo Soejanto. ‘This confirms margins are under pressure in the MP3 space due to competition from Apple. The company’s higher operating costs from heavy marketing expenses are also squeezing margins.’ Sharp price cuts of Apple’s iPod mini and the introduction of Apple’s very basic flash players at lower-than-expected prices, pushed Creative’s gross margins to 23 percent, below its forecast of 27 percent, said Craig McHugh, president of Creative Labs Inc., the company’s U.S. unit.”
“Analysts estimate that Apple, which shipped 5.31 million iPods in the March quarter, has a 60-70 percent market share. Apple has also encroached into Creative’s market for MP3 players based on flash memory chips with the launch of the gum-stick sized iPod Shuffle.” Reuters reports. Full article here.
“‘Over the next one to two years, we will see strong growth in the market before consolidation,’ said Soejanto. ‘Samsung has said there will be three top players in this market: Apple, Sony and themselves. I think Creative could be among the top five.'”
Reuters reports, “Creative chief executive Sim Wong Hoo said the company had to lower prices during the quarter in response to Apple’s price cuts. ‘The whole market is at an explosive stage. There are a lot of young users. We need to get them early, with simple flash players. If we lose them to somebody else, we will lose them for life,’ said Sim in response to questions on the firm’s strategy.”
Full article here.
MacDailyNews Take: Wait a second, we’re confused. How does Creative become the “Pepsi to Apple’s Coke,” if analysts “think” they might be lucky enough end up as the number five company in the portable music player market? Sounds more like RC Cola than Pepsi to us. We wonder how Mr. Sim feels about losing “the war” to a product that he has disrespectfully called “worse than the cheapest Chinese player?”
Related MacDailyNews articles:
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
Creative’s only hope for a comeback would be to give their players to hospitals’ maternity wards so that the hospital can bundle the player with the “new mommy” kits they give the mothers. I guess they could then market it as “Creative’s Baby’s First MP3 Player” featuring the tunes of Mozart, Chopin and Beethoven.
‘The whole market is at an explosive stage. There are a lot of young users. We need to get them early, with simple flash players. If we lose them to somebody else, we will lose them for life,’ said Sim in response to questions on the firm’s strategy.”
So in essensce, Mr Sim knows that 70% (and growing) of the US digital player market is lost to Apple.
I like where Apple is at with the iPod. A dominant force in digital media. I also don’t mind so much that Apple isn’t dominating computer sales. In a wierd way I like being in an elite minority. Vanity of vanity.
What’s wrong with Creative’s players? I don’t get it. Sure, I suppose it’s not as well designed or easy to use as an iPod despite being about the same price. And it doesn’t play all of your music that you bought on iTMS. And it’s Way Not Cool and makes you look like a dork. And it doesn’t work with a Mac. Or AirTunes. Or your car. Or any of those other cool iPod accessories. But besides that, I don’t see why they’re not crushing Apple in the marketplace.
Maybe Mr. Simm was really talking about his own products being the worst chinese products because guess what Mr. Simm, that’s how Creative sales were like.
Sounds more like they’re striving to become the Faygo or Shasta Cola of the mp3 market.
These would be the same simple flash players that he so derided then would it? Old Simmy boy couldn’t spot a winner if it had passed the winning post been hosed down and locked safely in its horse box while his own Dobbin was refusing at the first hurdle.
^ Or the Fanta soda of the market.
Ohhhh, give me a BREAK!
Sim Wong . . . WHOOOOOOO?????
I POOP on you!!!!
I really resent MDN comparing Creative with RC Cola. I Love RC Cola! I would much rather compare the Mac to RC. A smaller market but greatly superior product to the cheap sugar-water pushed by the larger thugs.
That being said. I love these articles. The iWanttabes are floundering so badly! Go Apple!!!
Beavis, I used to love me some Shasta Black Mountian Cherry Soda when I was a kid (wipes away a tear).
I wonder if Mr. Whothefeffcareswhatyouthink is still thinking so little of the Suffle now. Me thinks NOT!
Poor guy… It’s hard being Wong all the time.
RE: Don.
Nice racist comment, asshole.
Explosive stage where the most insane and chaotic things can happen! Like a sound card company that doesn’t know the first thing about software could RANDOMLY dominate the market.. and people could accidentally pick up creative players in droves without any half-decent advertising.. mwa ha ha ha… It’s madness I tell you.. MADNESS!
Will – it is people like you that abuse the term racist and take away the real meaning of the word.
There was NOTHING racist at all about Don’s comment.
The only asshole here is you, Will.
Hey, I like RC Cola!
Don, I was quite amused by your comment.
Will, I agree with Chris on this. That was not a racist comment. The joke did play on cultural and language differences. These things can divide us, but need not. It is hard to judge the intent behind the comment (by “hard” I mean “impossible”, without a lot of other information). Since that is the case, I tend to give someone the benefit of the doubt unless they have shown themselves to be speaking maliciously or ignorantly. Your post shows less thought than Don’s.
I thought Don’s comment was quite Creative.
It’s not racist at all.
In a similar vein, An Wang, the founder of Wang Computer, renovated Boston’s Metropolitan Theatre (now the Wang Center for the Performing Arts). His last name is commonly pronounced Wang (sounds like “sang”). This is incorrect.
During a TV interview, a reporter kept saying Dr. Wang’s last name incorrectly. He reponded, “Wang is wong.”
The correct pronounciation does rhymme with “song”.
I never could quite figure out if he was playing with alliteration or not with “wong” and “wrong” because “wang” is wrong and “wong” is right and non native-speaking Asians frequently drop their R’s in words.
Whatever Dr. Wang’s intent, his response ammused me. Too bad Wang Computer never did embrace the PC revolution in time. They had some great software and hardware engineers.
By supporting DRM WMA these me-too hardware makers can only hope for short term profit in the rare case when Apple is not addressing a product category (like flash-based players last year). If I buy an iPod and purchase music from iTMS I will have to buy another iPod in a few years just to keep playing those files. If I buy music from one of the DRM WMA stores I could buy any brand of player every time I upgraded. There would be no incentive to stay loyal to one brand. Creative might not even be around by the time current users need to upgrade.
Something’s wong with their businees plan.
whatever.. you bitches are all getting sued by RC Cola for libel… comparing them to Creative.. that’s mean
The correct spelling of Wang (pronounced WONG) is fine.. but most people are morons…
How does this sound: Xiang Cuo (SHEE-ung TS-woh)
Don’t expect Americans to figure out Pinyin for another 15 years
Until then, any racism is unintentional
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