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Creative Sees Profit Drop on Stiff MP3 Player Competition

Creative on Thursday reported increased revenue for its previous financial quarter, but the Singapore company's net profit took a hit as stiff competition from Apple and other MP3 player makers took its toll. According to an IDG News Service story, revenue jumped from US$375.1 million to $390.8 million in the year-ago quarter, but net profit declined from $11.8 million to $8.2 million.

However, Creative did see increased sales of its MP3 players, audio products, Web cams and speaker systems, and it was able to reduce inventory. The company said it sees its new Zen Vision:M to be a popular device this year. The 30GB MP3 player can also display photos and videos and has a 2.5-inch LCD screen.

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vasic said:

member since 09 Aug 2005 with 279 posts, unranked, send him a message or view his profile

Brrrrrrrrr.... an iPod killer is on the way...! Seriously, while I have no reason not to whish them all the best of luck, it is really hard to imagine anyone in the world willing to spend more in order to get this Zen thing instead of iPod video! Not long ago, iPod used to cost more than a comparable device from a competitor. Now, when an iPod is $300 and Zen iz $330, very few people are wondering why the profits are dropping at (un)Creative...

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A guest said: (hide)

He said "stiff."

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Dreadnought said:

member since 01 Jan 2005 with 162 posts, unranked, send him a message or view his profile

I wonder if Creative is selling at a loss... since I've not seen any mass audience marketing of their devices. I was in a CompUSA the other day, and they had a bunch of MP3 players chained to a display - including a few Creative models. In the spirit of scientific inquiry, I wanted to see exactly how the close the Creative interface (the one they supposedly patented) was to the iPod's. It took a few minutes for the sales clerk to stop laughing when I asked to see a working version of a Zen. He told me that the display models hadn't been changed since the store started to carry iPods, and they didn't even stock the Zen. He wasn't even sure if they carried any digital music players other than the iPod.

I can't help but think that even if a better non-Apple player does come along, it won't "kill" the iPod. It's the accessories, baby - all of the major audio manufacturer are making systems that interface with the iPod directly through the dock, and these units are customized to hold the iPod. The car kits are for the iPod with the dock connector - connections via the RCA jack give limited functionality.

As the iPod's market penetration increases, so does the brand loyalty, simply because of the interoperability of accessories across the generations. Who's going to switch to a different brand after spending hundreds of dollars on getting the iPod integrated into the car stereo system (or buying a car with the iPod interface factory installed)? It's a pity that cell phone manufacturers don't realize this simple trick - if I don't have to spend $100 on chargers and accessories, I'm more likely to buy a better phone.

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A guest said: (hide)

You said "penetration."

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