Creative's new strategy -- keep prices high

Oh, Sim Wong Hoo, you kill us! In November of last year you told us that your company, Creative, had declared war on Apple. Eleven months later your marketshare has actually fallen, not risen, and you've just reported that profits for this past quarter are down 86% in the face of "fierce price competition." It's a tough game — even Apple has started to price its players more aggressively — so what's Sim Wong Hoo's game plan? Well, it's definitely not to try and compete on price since he's made it clear that they're not going to be offering anyone any more discounts. He actually told the BBC News that from now on Creative is going to be "focusing on profitability" and that they're not going to "go aggressively on market share — we need to hold back our appetite and sell at a higher price."  Sure, there are some perfectly sound business reasons for this kind of strategy — marketshare is irrelevant if you're not actually making any money — but of last year Creative clearly wanted to be the biggest MP3 player maker in the world. When you start talking about how you're no longer going to even try and outsell your main competitor, there's no mistaking this for what it really is: a huge retreat. Are they really expecting people to pay a premium to own a Creative player? 

[gadgetgav @ Dec 19th 2005 12:20AM]

Time to start the Creative Deathwatch..?

[Jeff @ Dec 19th 2005 12:20AM]

Best of luck to you on that sales strategy Creative. Any bets on how long before they exit the MP3 player market? ;-)

[DarkMirage @ Dec 19th 2005 12:20AM]

Even though I'm a Singaporean, I just can't bring myself to purchase a Creative player...

They all seem so... clumsy.

[Jason @ Dec 19th 2005 12:20AM]

I did. I paid a premium for Creative. Why? Because the Zen Micro is an excellent device, comparable with the Mini, but supports Plays for Sure. Apple doesn't.

[Jeff @ Dec 19th 2005 12:20AM]

"supports Plays for Sure. Apple doesn't."

Selling point for Apple, if you ask me.

[Killian @ Dec 19th 2005 12:20AM]

Haha, no kidding.

[Tom @ Dec 19th 2005 12:20AM]

Ouch. That must burn Creative.

[Craig @ Dec 19th 2005 12:20AM]

I recently sold my iPod in anticipation of the 5th gen iPod (which I will eventually buy), so I've been using my old Creative Nomad JukeBox 3 for a while. At first I felt sorry for Creative, being an iPod competitor and all. But after I installed MediaSource to transfer new mp3s to the device, I no longer have any sympathy. It is the buggiest program ever, and constantly crashed as I was trying to use it. All I had to do was hit a letter key while the program was open and it would crash.

Creative's Nomad Explorer (not Notmad) utilizes drag-and-drop. It is much more stable, but you can't add albums in mass because every time you drag-and-drop an album folder with anything in it that's not an mp3 (such as a jpeg or playlist file), it gives you a warning that it can't transfer the file. And it won't continue loading until you acknowledge the warning. So as your transferring albums, you have to sit there and keep clicking OK during the entire process. What's possibly worse is that this isn't even a bug; it's just a huge design flaw.

I'd bug Creative tech support about it, but I know nothing would change.

[Joshua Ochs @ Dec 19th 2005 12:20AM]

Creative will survive, simply because there is a market for non-iPod MP3 players. It just happens that it's a niche, not the dominant market some people (mostly analysts) thought it would be.

[Roopesh Sheth @ Dec 19th 2005 12:20AM]

Jeff - you're an idiot. PlaysForSure actually gives consumers choices, not like iTunes propreitary-one-vendor "choice".

[ACBC @ Dec 19th 2005 12:20AM]

Tried a Zen Micro. Took it back, bought a Mini.

[Jack @ Dec 19th 2005 12:20AM]

well you gotta give them credit for trying. i mean short of handing out their players for free they wont overtake apple in market share anytime soon so instead creative is reinventing their product and their consumer. we all know how nintendo revitalized its image by rebranding itself an entertainment company as opposed to a gaming company. perhaps creative has discovered that theres more than enough market for both companies they just need to stop competing for the same customers. whether creative makes an inferior product to apple is of little relevence as we engadget readers gawk over specs your average customer just needs to have a task performed. i think creative may just have a successful future yet.

[omega @ Dec 19th 2005 12:20AM]

I bought a mp3 player from Creative and It doesn't last more than 3 months. The casing just opened into two. No exchange from them, so no Creative for me in again as long as I live.

BTW is I posted a few postings on cnet about Creative mp3 player questioning about its built quality. I advised buyers not to trust cnet with its one-sided reports

[James Hare @ Dec 19th 2005 12:20AM]

iPod/Macintosh Owner
I admit, those two things probably render my opinion moot--however, I've also had experience with Creative's players. The original Nomad Jukebox was revolutionary--it was the first hard-disk based mp3 player I was aware--hell, I wanted one back in the day even though it was mad expensive. Now, I'm not interested in creative products. They have some good ideas with the zen micro--the removable battery is a great idea that fixes one of the iPod's bigger problems; however, the interface of the zen players I've used has been clunky. The buttons on the zen players I've used haven't been responsive and they don't have any touch response (I.E. a click or other way to know you've "pressed" a button). I'm not sure if they've fixed this (zen micro photo seems to be the same). Apple has no reason to offer other download services--they want to maximize their profits and IMHO there isn't another music store out there with the selection of the ITMS. Yes, from a standpoint of "you should be able to use your stuff as you see fit" the iPod probably leaves alot to be desired, but from a usability standard it's got everone (except knockoffs) pretty much beat. I say that because the click wheel really is THAT great. I'm sure there's iPod haters out there (and I can't understand why people get so pissy about a DAP. I guess it's the same people who hate microsoft for their market share) who will claim it's crap, but they're just as biased as I am. Apple just does interface design better than just about anyone these days--while I'd love to see competition because it would force Apple to perform better (not that they're not innovating), it's just not in the cards right now. You can hate the iPod, but it ain't going away. Creative looks like they're trying to go out of business by offering zens with very little innovation and few new features. It looks like their new strategy is to get rid of their remaining stocks at the highest price possible and then just get out. Probably the best thing for them.

[Oli @ Dec 19th 2005 12:20AM]

> Jeff - you're an idiot. PlaysForSure actually gives consumers
> choices, not like iTunes propreitary-one-vendor "choice".

Ooh, choices! Let's see... I can play my purchased "Playsforsure"-Tunes under Windows and... erm... Windows... ahem....

See, no reason calling someone an idiot, it's all DRM. One way or another it IS restricting you. I (for one) would like to play my music on my Mac AND on my PC. Microsoft doesn't offer me that kind of choice. So it's really a question of what kind of restriction are you going to live with. But it's definitely not about choice.

To be on the safe side I always burn an audio CD of every album I purchase.

[Zach Mauch @ Dec 19th 2005 12:20AM]

This would be really smart if it weren't for one thing. He told us about it. Knowing that I am getting ripped off, I will never buy a creative player.

[Teve Torbes @ Dec 19th 2005 12:20AM]

I don't see whats 'bad' about MS's PlaysForSure. Being able to download all the DRM'd music you want for $7 a month off Yahoo Music Unlimited doesn't sound 'bad' to me. Who cares if I don't own it? At $7 a month it costs less that an album. If Apple added a subscription based service to iTMS, it would be hailed as a breakthrough; even if it cost twice as much as Yahoo. As far as Creative's players go, they're garbage and Creative is insane if they're thinking that they'll sell anymore players by pricing them at a 'premium'. With the soundcard market being eroded away by onboard sound becoming good enough for most people, I hope Creative can survive selling X-Fi soundcards to gamers and desktop speakers.

[gadgetgav @ Dec 19th 2005 12:20AM]

Ha ha.. choice. Yeah, right. Like the Real 'Freedom of music choice' campaign..? What a hit that was and like #13 said, these things aren't a choice, except that you choose to be limited to the one other platform.

[Cameron @ Dec 19th 2005 12:20AM]

#15, This would be really smart if Creative's products were better than it's competitors.

It seems like Creative wants to exit the MP3 player market without the embarassment of having to say they are. Market suicide.

[Alan Strangis @ Dec 19th 2005 12:20AM]

#14: "To be on the safe side I always burn an audio CD of every album I purchase."

Why not just buy the CD, then, and rip the other way? The cost differential is negligible, and hey, those used CD stores are still doing a brisk business in case you really don't like an album. ;)

IMHO a debate about iTunes vs Windows DRM is a debate about HOW one likes to get screwed. ;)

[Peter Kirn @ Dec 19th 2005 12:20AM]

Sorry, newsflash, gang -- Yahoo just jacked up prices to $10/mo, I'm assuming because of some price squeeze from the industry (though maybe it's Yahoo's fault).

Anyway, choice = CDs. That's choice. Both WMA10 DRM (Plays for Sure) and Apple's FairPlay lock you into a single system, period.

Now, that said, I agree with the others -- the ability to pay a monthly fee and download as much music as you want is great. And it lets me save more $$ for the CDs I really want, which I buy as -- you guessed it -- CDs.

Another point no one has hit here: the signal-to-noise on the Creative players is the best to the industry. They sound great. Too bad the software and industrial design are so lame. And why did they take out their line in jacks?

[Stretchpants @ Dec 19th 2005 12:20AM]

Hmmm... never liked Creative players all that much. Yes, I'm an iPod user, but I still love my Dell Pocket DJ.

Innovation on Creative players stops when they price themselves out of the market. Then they can bow out somewhat gracefully.

[Jeff @ Dec 19th 2005 12:20AM]

"Jeff - you're an idiot. PlaysForSure actually gives consumers choices, not like iTunes propreitary-one-vendor "choice"."

Sure, choices. As long as your choice is DRM'd Windows Media. That's what "Plays for Sure" means, which I guess you didn't know.

If you *did* know, and are still spouting that crap, then you're either a) a Microsoft employee, or b) a brainwashed simpleton without the ability to self-reason.

There's no need to stick a "brand" like "Plays for Sure" on anything unless you're trying to sell a format. It's got nothing to do with choice. Any time I see any stupid slogan like that on any product, it is a signal to me to stay far, far away. No open-source organization, for example, is going to be coming up with some idiotic corporate slogan to stick on all their products. Only major corporations looking to control a market do stuff like that.

Regardless, it's not even really about the fact that these "choices" you're talking about are really just a lock into a DRM'd format controlled by Microsoft.

No, the real issue is that WINDOWS MEDIA SUCKS. Sorry, but it does. If you don't believe it, see here - it came in second to last in this listening test, with only ATRAC behind it: http://www.rjamorim.com/test/multiformat128/results.html

Nobody who cares about the quality of their music would be bothering with Windows Media. Even MP3 is better. AAC is better still, and of course there's lossless, which the iPod also supports. I don't see how "Plays for Sure" would give me any more "choice" than I already have or need.

If I *was* going to go for a non-iPod as my next music player, I'd be looking for OGG Vorbis support, not any of this "Plays for Sure" garbage.

[Homer J @ Dec 19th 2005 12:20AM]

After a brief look at the creative website...I think I will be looking to spend my money elsewhere discount or none....

[Zolointo @ Dec 19th 2005 12:20AM]

Creative vs Apple for portable music device dominance is an easy call for anyone to make. It's ballsy not to slice and dice your prices, which in many cases is actually a good decision to make. But Creative? You don't got none game.

Creative's future is questionable also. As mentioned, on-board sound has caught up a lot, and many of the innovations that Creative touts for it's new line are shruggable in their importance. Hell, I've been using a first generation Audigy for years now, and see no reason to upgrade. Their speaker line is nothing to write home about either, with heavy competition from Logitech and Klipsch. To boot, Creative's drivers are consistantly introducing new problems, and are released with far too little frequency.

Hello Adlib!

[Lenny @ Dec 19th 2005 12:20AM]

I had a 40 gig Nomad Zen Xtra, and I liked it at first, it had a decent battery life and the interface was clunky, but useable.

I spent 5 minutes with an iPod and I sold the Nomad.

What sells the iPod? the UI. The look is part of it, but Apple does one thing right, they make it easy to use, and that's why people buy iPods.

And if you dont want to pay for the apple product, then buy someone else's MP3 player. But you have to think about why Apple has 90%+ of the HD Based MP3 player market, when Creative has been making them just as long, if not longer.

And for the troll at #20, I have a 2nd gen 20 gig iPod whos battery has lasted years and is still going strong, so, your disposable argument is lame and unfounded. Just because you got a bad product doesnt mean the whole line is bad.

[Peter Kirn @ Dec 19th 2005 12:20AM]

More Apples to oranges: Yahoo's WMA music is at 192 kbps, compared to Napster's 128 and Rhapsody's 160. That's a difference you can really hear. WMA10 192 / Real 192 both sound comparable to me to what you get from the iTunes Music Store.

Anyone, anyone who cares about the quality of their music would be listening to a CD. Or a Super CD. Or live music. ;-)

[Cem @ Dec 19th 2005 12:20AM]

A very stupid move, they should focus on compatibility, quality, durability, better design and strategic partnerships.

[anonymous @ Dec 19th 2005 12:20AM]

The prices in the UK are already outrageous. Look at the price of the Zen MicroPhoto (8GB) -- �199.99!
...You can get a 30gb ipod for �219.

http://www.amazon.co.uk/exec/obidos/ASIN/B000BFN7PE/qid=1130340527/sr=1-3/ref=sr_1_2_3/202-4285714-1633455

[Ihar `Philips` Filipau @ Dec 19th 2005 12:20AM]

I can only second point made that M$' PlayForSure is garbage.

M$ DRM is avaialble solely on Wind0ze.
Apple's DRM is available on Mac & Wind0ze. And with little hacking on Linux/x86.

I do not see any supportive argument in favor for M$. I use all three major OSs - Linux, Mac OS X & Wind0ze - and it is pretty pissing to deal with all the problems M$ manages to create under Wind0ze and which gets exported to other OSs.

Another reason, which gets completely ignored here - since Engadget readership is primarily of US - localization. iTunes/iPod first combination which properly supports unicode/all charsets I use. All "native" Windows media players is 100% unusable for me - Real, WinAmp, etc - for this sole reason. It's really bugging to see garbage instead of proper names. Cudos to Apple.

Additionally, support of lossless codec by Apple gives me hope that I would be able to buy music losslessly coded from iTMS. I hope that would be the day when I will stop buying CDs.

P.S. Another point. Apple (to my knowledge) has pretty good track record with multimedia. M$ dropped AVI support in Win2k, rendering many files unviewable for many end-users. Apple's QuickTime still supports all antique codecs were ever put inside. What PlayForSure crowd will do when M$ will invent next greater technology - say PrayForSure - and drop support for all previous developments including PlayForSure? What will Wind0ze user do? [CENSORED] off as usual???

[NintenGirl.com @ Dec 19th 2005 12:20AM]

I remember meeting Sim Wong Hoo in Singapore. He's just another Singaporean who doesn't know wat's going on outside the world, that's my first impression for him......

[NintenGirl.com @ Dec 19th 2005 12:20AM]

I remember meeting Sim Wong Hoo in Singapore. He's just another Singaporean who doesn't know wat's going on outside the world, that's my first impression for him......

[Michael @ Dec 19th 2005 12:20AM]

Roopesh Sheth, you've been reading Microsoft's talking points, haven't you?

[homer @ Dec 19th 2005 12:20AM]

When the ultraexpensive mac were able to make quack and ding sounds. Creative was selling soundblast cards. I used to have a sound blaster pro in 1991.
When the ipod was nothing, Creative was selling 6 GB Nomad Jukebox DAP.

So, apple-clowns shut up.

[Mark @ Dec 19th 2005 12:20AM]

#20 (Kamil):
Just a reminder, it's not a premium if its cheaper than a competitor, hence an iPod won't be at a premium price spot if Creative keeps the prices above Apple's (aka 'at a premium'.)


Also, drop the battery thing, how much does the replacable Creative battery cost? What's the difference between the price to have Apple Service replace it for you? I bet you don't even know. ($60 for Apple to do it for you, or $40 to do it yourself with a Creative product, at least the iPod avoids one more breakable latching part, I've had enough audio devices to have learned to hate the battery door) Also, lets not forget that almost everyone was cranking out built-in non-removable batteries at some point. I still have my RCA Lyra 40gb with its non-replacable battery and it's moving on the 2 year mark soon so the battery life isn't too hot (and never really was), the catch is there is no official replacement policy for it, so if anything it's worse than Apple's battery policy.

[Michael @ Dec 19th 2005 12:20AM]

"Idiots pay a premium for a white peice of shit iPod, i dont see why people wouldnt want a creative mp3. And since were talking about limitations and stuff, how about that piss poor non-removable, warranty voiding, 18 month lasting battery from apple?"

The battery from my 10GB Ipod bought in 2001 is still functioning fine.

[Phil @ Dec 19th 2005 12:20AM]

When the mac was making quack sounds, the PC was making beeps, unless it used that Creative card...

[DM @ Dec 19th 2005 12:20AM]

#29 Wind0ze..Wind0ze..Wind0ze..

Wow, you said "Wind0ze"! That makes you a uber cool dude in everybody's book....NOT

[The Jeremy @ Dec 19th 2005 12:20AM]

Good riddance. One less weak competitor in the market. Maybe that means iRiver can scoop up the rest of the non-iPod sales. Surely that would be a market benefit.

[Mark @ Dec 19th 2005 12:20AM]

#31:

Erm, didn't Apple include professional-grade audio chips in the Apple II GS, you know, back in 1986?

Who cares if Creative was making sound cards for years, that doesn't mean they're at the top of their game anymore, I mean Atari was at the forfront of gaming originally and they pretty much ceased to exist when they sold off their name and assets a few years back, I'd hardly use a company's history in it's field alone as a defensive point. Also, with a trake record of flimsy software Creative could stand to take note of competitor innovations, I think iRiver and iPod before I think Nomad (hey, wasn't that a SEGA Console name, too?)/Zen when it comes to ease of use, style, and popularity.

Also, nobody said Apple was first, they just figured out the right combination to actually make people want thier product. There were many digital audio players before Creative and they floundered and disappeared long before the iPod or the Nomad came into play.

[Alan Strangis @ Dec 19th 2005 12:20AM]

@ 38 (The Jeremy):

Couldn't agree more. I've had a chance to play with some iRiver products. Pretty nice stuff, actually.

[Mark @ Dec 19th 2005 12:20AM]

whoops, sorry for the wrong reply number in my previous comment, things are moving fast around here.

[Chris @ Dec 19th 2005 12:20AM]

Apple is kicking everyone asses. Guess why?

1.Software. iTunes is the best thing since sliced bread. There is no debate on how easy it is to update it.
2. Looks. You cant deny the sexiness of this thing.
3. OS. The OS is the easiest to navigate of any MP3 player with the scroll wheel.


And as for creative. Why keep prices up, if you already are not selling, keeping your high prices are not going to help!

[silentio @ Dec 19th 2005 12:20AM]

To NintenGirl #31

I don't know if you meant it that way, but the way you put it makes it seem like Singaporeans in general do not know what's happening in the outside world.

Considering there are some people in the US who still ask which part of China Singapore is in (this actually happened, a few times), I would say most Singaporeans are relatively well-informed. In fact, the bulk of them keep up with international news, that is, stay informed about the mighty USA, and the could-possibly-be-mightier China.

Of course, your exact words were "He's just another Singaporean who doesn't know wat's going on outside the world...", so you could be saying Singaporeans don't know much about a parallel universe, about the world that is outside of ours, which I totally agree. I mean, who knows what's out there?

[Cheeks @ Dec 19th 2005 12:20AM]

To hell with Creative. I've owned a few different MP3 players made by Creative and they all sucked ass. I've been working my ipod for 2 years now and still no problems.

[tf @ Dec 19th 2005 12:20AM]

I think it's worth noting (especially since no one seems to cover what I consider to be a very important story) Loudeye, the company that powers probably about 40% of all WMA-powered digital music stores (remember, they purchased OD2 which was the most successful digital music store backend in Europe a couple of years ago) is rapidly burning up and will not exist for much longer! They've gone from being a 1.5 billion dollar company to an 89 million dollar company. (They probably have more cash than that, but the market still sees something to think they aren't worth anything.)

Heck, soon they'll be declining by fractions of a penny a day, and it will still be a 3% loss per day. (I don't understand why they haven't been delisted yet, but they are sure to be soon.)

SO pretty soon, your "choices" (which I agree is a misnomer) are going to be Yahoo, Napster, and Real. (Even MSN Music gets the bulk of its content from MusicNet and Loudeye.)

[homer @ Dec 19th 2005 12:20AM]

ipod is cheaper than any other DAP.
Of course, i-tunes charges $2 for each video and $1 for any song.

it's the gameboy syndrome: gameboy $50, each game $60.

[Samuel Febres @ Dec 19th 2005 12:20AM]

Regardless of what you think of itunes DRM and whatnot, itunes is a pretty good music management software, even if you don't want to download music from their store. I used itunes before I ever owned an ipod and I loved it. It worked great for me and kept the music organized quite nicely in folders (an option selected when installed).

I also like that it gives me different options for how I import music from CD's that I buy. I primarily like to OWN the items I purchase completely. Buying a CD does this. I import it to my computer and store the CD away to keep it safe. If I do buy something from the ITMS, it's maybe a song or something I heard on the radio, or just the weekly free downloads that are provided to check something new out.

Anyway, for simple music management, itunes is pretty good software worth checking out. I think people tend to forget this, unless you disagree.

[Peter @ Dec 19th 2005 12:20AM]

Points:

1: Creative vs Apple:
It is not just Creative vs Apple. It is Apple the dominant player with creative vs everyone else for the leftover scraps.

2:MS "playforsure" vs Itunes.
MS DRM offers you a choice of second rate services vs Itunes which is the best service. What is the point of choice, if your choice is only among 2nd, 3rd, 4th...

3:Music Rental (Yahoo model):
This model is for Chumps. 10$/month x the rest of your life equal??

4: DRM
DRM is for Chumps anyway. I have most of the music I like on CD with no DRM and superb quality. I rip my own MP3s at high quality that will play on any player. From what I hear Itunes lets you burn a CD with you downloaded tunes which means you have full access to it.

5: Creative
I think they are toast. Once I bought my Nforce motherboard with soundstorm, there was no need to think about sound cards anymore. And as far as MP3 players, what do they do that is any better than 20 other companies doing mp3 players let alone the marketing machine that is Apple. Further once these bozos hauled out an obscure patent to threaten ID software (makers of Doom), I swore off their products forever. Stick a fork in em...

[JC @ Dec 19th 2005 12:20AM]

Kamil Mytnik, the last time I saw someone put so much effort into hating something, their children ended up marrying what that person hated.