Creative CEO upset that Apple created a flash memory shortage
posted Oct 27th 2005 7:00AM
It ain't
just the Koreans who are crying foul over the
sweet deal Samsung cut Apple on NAND flash memory modules
(like the ones being used in the iPod nano) — our old
friend Sim Wong Hoo (aka the
CEO of Creative) isn't happy either — it's been a
"busy" couple of days for him. He's complaining
that Samsung gave Apple a "one-sided deal" that no one else the industry has been able to get (Samsung has been accused
of selling the memory chips to Apple below market value) and has directly resulted in an industry-wide shortage of
flash modules that will make it difficult for Creative to keep several of their flash-based players in stock this
holiday season. Don't worry about ol'Creative, though, Mr. Sim is really just looking out for the little guys:
The low-end [manufacturers] went out of business in the last few months because it's very hard to face this pressure. If Creative is losing money then it's very difficult for other companies to really fight in this battle.
Boo freaking Hoo. Hate to say it, but business is business and as long as no laws are broken (and
we'll leave that issue up to the Korean FTC to decide),
there's nothing wrong with a company locking down a strategic resource (in this case, flash memory) in order to keep it
out of the hands of the competition.
[Via TechDirt]
once again, apple can do no wrong in engadgets eyes. This site has gone down hill.
Why does Creative expect to get the same price? ... there is a big difference between having 75% of the market and less than 2%.
How about the fact that consumers will have fewer options to choose from, reducing competition, something capitalism depends on? Cornering the market like this, if it continues, is the sort of thing anti-trust lawsuits are made of. Looks like Apple has learned its lesson well from Microsoft.
I dont know why your blaming apple, apple isnt selling the ram at below cost.
as Derrick said, 75% vs 2%...I wonder where samsung decided to hedge its bets...
Now hold on #1, Engadget would/should give the same oppinion on this issue no matter what the company. If you think that it has "gone down hill", then why read Engadget? Anyway, i think that is is a valid strategic move. It happnes all the time in the world of buisness. It is a little sad however to see the big companies killing off all the little guys.
To think that any other company in Apple's position would not have the same thing to ensure supply at a great price is delusional.
wow corporatewhore...i guess reporting the truth is Apple-biased, grow up. This is just an example of smart business. If Apple has dominant marketshare, then it makes sense to offer them a better price to get their business. Creative is just angry because they can't match Apple's numbers, so they resort to petty fingerpointing like this to make up for their poor sales. And number 3, government regulation on competition are a cornerstone of US capitalism. True capitalism entails no government involvement. and a move like this would be viewed as just good business, which it is
What should Creative do? They have to find a niche or pivot that let's them compete with Apple. This seems like a good subject for one of your "What should X do" columns. I'll start.
1) Make a stand and refuse to support any DRM. Which basically means telling MS/Napster and the whole PlaysForSure crapola to take a hike.
2) Support all the obvious formats (w/o DRM), MP3, AAC, WMA, DivX, Ogg, etc etc etc. See below.
3) Throw away the awful Creative music management software and write plug-ins for all the major ones. Open source the plug ins. Want to use Winamp or Mplayer? Go ahead.
4) Open Source the firmware. Actively encourage the community to extend it. Feed the results back into your distribution.
5) Support all those slightly awkward USB functions. Driverless connnection, drag and drop in both directions, USB HOST so that plugging one device into another lets you move files between them.
5) Make the batteries swappable and chargeable off line. Make it easy to buy a third party disk and upgrade it.
6) Compete with Apple on function and price. Put in a better screen, more storage for the same price. Don't worry too much about style, you're doing OK. But focus on function and price. Get people to buy your product beceause it just plain works better. Point out aggressively where the iPod is not great but your product is (come on Apple Zealots, the iPods aren't perfect and can always be improved).
yes, it is unfortunate that creative can't get sufficient memory for crappy players no one buys. lord knows they wouldn't be able to create a shortage by (gasp) actual sales. if they spent half as much time coming up with better products as whining about apple they would be better off.
fewer options? give me a break. there are approximately a billion different digital audio players available.
Creative, stop whining, start creating good products.
Post #1: You're just an asshole.
As a fanboi of Apple, I am very aware of non-competitive practices because of Microsoft's continuing abuse of their dominance in the OS market. The last thing on Earth I want is for Apple to turn into Microsoft. And lately I think Apple is certainly walking a fine line.
But this is very different. Don't forget, Creative "declared war" on Apple in the MP3 player market. And now they're upset because Apple is winning that war. Apple had every right to make an agreement with a supplier to purchase every, single solitary stock of their supply. And the supplier has no reason not to sell to Apple since they know the product will move. It's a guaranteed sale.
this is rediculous as if I didnt hate Ipods enough. Hopefully companies like Creative and RCA still have the resources to develop new products like the Lyra from RCA(although slow and tanky) which is only just starting to be caught up with by Apple.
Uh, PhillyPhreak, someone needs to go back to economics 101. This is a perfect example of capitalism - Competition is the PRODUCT of capitalism, not the root of, nor the cause for.
Creating competition for the sake of competition, or artificially creating more "choices," is *not* capitalism.
It beyond clear that apple's huge market share has created more competition.
Dear Creative, I own an 3G iPod that is getting a little long in the tooth. When my wife won a MuVo FM from a local radio station I figured it would be a nice toy for her to play with and not much else. I was wrong. I think the MuVo FM is a fantastic little device. It does voice recording, FM, acts as a memory stick, it sounds decent, and it is super light weight... but it doesn't play AACs. I can understand Creative not supporting FairPlay songs (even if Apple sold you a license; which isn't happening). But my entire library has been ripped into the better-quality-per-megabyte AAC format. Maintaining MP3 versions of songs that I can export to the MuVo FM is a hassle. That alone is the only reason I have not gone out and bought a MuVo for myself. Support other formats and people will come.
-p-
So funny to see, now that Apple got's big enough in one area it starts to do exactly the same as Microsoft was doing for a long time.
However with Apple it still seems to cool to squeeze other companies out of the market at all cost and tricks.
Creative doesn't need cheap memory. They need software that works and a UI/touchstrip that isn't buggy.
Next we should bark at Southwest Airlines for locking in a supply of oil in order to remain competitive in the wake of volatile oil prices.
The easy way out is to cry foul when someone beats you to the punch. Besides, you should have thought of that in the first place, right?
Good think for competitive business.
Creative 0, Consumers 1 .
One thing Creative can do to really improve itself and remove its stress level, it shutdown like RIO did. Less junk to worry about.
"Hate to say it, but business is business and as long as no laws are broken"
Well, according to the Korean FTC (as you noted)they may have broken a law, so that its not just "business is business". Apple hasn't been this successful with products for a while, its about time we start to see their M$ side...
As for Creative, their Micro line is def. an excellent product, easily beating the iPod Mini dollar-for-dollar. More features (radio, voice/radio recorder, mass media, highest quality audio (98s/n), removeable battery, equalizer, and the ability to use software aside from their own. iPod's success isn't based on the excellence of their products, rather their mass market appeal. Creative doesn't create crappy products, they just suck at marketing.
are you kidding ? apple is succesfull because it just plain works. it's not like microsoft where every now and then you blue screens, clumsy OS that hangs your applications, or some times just restarts because of device driver problems.
I don't know if I can say the same thing about creative. Creative products just look all the same. WHen they declared war with apple, all they did is to copy apple's look, throw in some FM Radio, voice recorder etc. produce it in a lot of colours etc. Where's the innovation there ? its just plain copying. Remove apple and I don't think creative will innovate. Remember that creative has been in MP3 years before apple so why didn't they captured the market ?
I think you're right, I should stop reading it, which will be a shame as it was the place to find out what was new in the gadget world. Articles like this aren't really of any interest to me, they just piss me off. Especially when you're abused for having a different opinion. Chris ... shame for you, I actually liked what you had to say about apple.
And for all you sheep. Graze happy. And remember to huddle together when the rain comes.
Let's see...I'm Apple...some other company 'wages war' with me...I fight back...and win...and I'm the bad guy?
You guys are too much.
Yah they don't have marketing. Infact they don't even know how to market!!!
I know for one instance (I've read from a newspaper in singapore) that when Apple released a U2 Ipod with U2's signature, Sim Wong Hoo released a Creative player with HIS own signature to compete with the U2 Ipod. Yah right. Why not Jackie Chan's one ? Or maybe Ryan Block's signature ?
So funny to see, now that Apple got's big enough in one area it starts to do exactly the same as Microsoft was doing for a long time.
However with Apple it still seems to cool to squeeze other companies out of the market at all cost and tricks.
--
eh? it's a volume discount. not exactly a 'trick'
WTF, Creative is one of the most anti-competitive companies I have ever known. You guys remember Aureal? Basically, Aureal started to be a competitive threat, Creative sued them on some hokey patent claim, Aureal won the case but in the act of defending themselves ran out of money. Aureal ultimately had to file Chapter 11. Once dead, Creative bought their IP and absorbed it into their own; leaving anyone with an Aureal sound card high and dry with no driver support.
http://en.wikipedia.org/wiki/Creative_Labs#Criticism
This is only one example of the anti-competitive crap Creative is known to do. So shut up about Apple pushing poor Creative around.
Well you know what - I'm with Corporate Whore on this one. It's all well and good if a company is successful on merit, but when it uses market position to block others then I think that is plain wrong. If you applaud business being run in that way then I worry about your morality.
"there’s nothing wrong with a company locking down a strategic resource" - I think there is.
posting an article on creative is a fast way to discover how many
apple-boys are.
25 for now.
Strange that since Creative is the "pioneer" in the MP3 market, shouldn't it be MORE able to predict production and demand, and thereby theoretically should be more able to negotiate with any of the flash memory makers?
Even more strange, they have also dived into the movie or content creation arena by investing in George Lucas' new animation studio in Singapore. Remember that Jobs owns Pixar. Hmmm....
hey homer, i think that period of yours needed to be a few more words--can you say sentence fragment? well maybe i'm asking too much, at least you can count.
ps. 25 + 1 = 26 "apple-boys" --just thought i'd save you the headaches.
You guys are hilarious. When Microsoft does something like this, you guys react, "OMG, the evil empire is at it again." Then Apple comes around with the same business practice, and you find ways to justify it. In this case, Apple is doing the killing of competition, but it's OK, Apple is not capable of evil! Listen to yourselves. Hypocrites.
Maybe if Creative lived up to their name, they'd be in Apple's shoes. Instead they have supplied the market with crappy, poorly conceived MP3 players that are as desirable as a Bratz doll.
Also, it's good to see an American company squeeze the balls of a foreign competitor. Always make for good patriot ego boosting, chest thumping feeling.
mmm, make that 26 there homer...
I don't think there's anything creative about creative. all their shit is the same, at least apple can put a pretty face on their stuff.
For some reason I don't think Creative is going to have any trouble at all keeping their players in stock.