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Creative's new strategy -- keep prices high

Creative's new strategy -- keep prices high image
Creative's new strategy -- keep prices high image
Peter Rojas
Peter Rojas|October 26, 2005 10:05 AM
Creative CEO Sim Wong Hoo

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? 

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