Creative vs Apple - Who’s the real winner?
On the face of it, it’s fantastic news for Creative: this morning it announced jointly with Apple that they had settled their patent dispute out of court, with Apple paying US$100 mln to Creative for a paid-up license to use technology patented by Creative, with a chance to earn some of it back when other companies license Creative’s patented technology.
In addition, they’re going to be working closer together. Creative is joining Apple’s “Made for iPod” program, whereby third party suppliers make products for the iPod. In this case, Creative is going to supply speakers, earphones, headphones and audio enhancement products.
Apple’s CEO Steve Jobs nailed it when he said the deal “removes the uncertainty and distraction of prolonged litigation”. But where does this leave the two companies’ competitive position in the longer term?
My view is that Apple is the winner. The reason for this is illustrated most poignantly by the fact that Creative is going to create products for the iPod. Not the other way around. Apple is not going to create products for Creative’s Zen, Nomad and MuVo brands of MP3 players, even though they may be better in some respects than the iPod, such as the fact that Creative’s players come with built-in radio. As Sim Wong Hoo admits in the same statement: “Apple has built up a huge ecosystem for its iPod”. And Creative has not. That’s the difference. Not product specs.
Creative has won the battle. But Apple has won the war. Creative’s participation in the “Made for iPod” program means that the only real challenger to the iPod has become a supplier to the iPod. Sure, Creative is now able to take part in the growth of its competitor, but before long they will have to ask themselves for how long they will continue to be competition. When will Creative realise the futility of making its own MP3 players? All of this leaves Creative back to where it started: in the absence of the soundcard market which made it famous, it is looking for a new product to excel in. If Creative is smart it will use the US$100 mln to develop such products, and after that let its MP3 players disappear slowly from the scene.
ArchivesIn addition, they’re going to be working closer together. Creative is joining Apple’s “Made for iPod” program, whereby third party suppliers make products for the iPod. In this case, Creative is going to supply speakers, earphones, headphones and audio enhancement products.
Apple’s CEO Steve Jobs nailed it when he said the deal “removes the uncertainty and distraction of prolonged litigation”. But where does this leave the two companies’ competitive position in the longer term?
My view is that Apple is the winner. The reason for this is illustrated most poignantly by the fact that Creative is going to create products for the iPod. Not the other way around. Apple is not going to create products for Creative’s Zen, Nomad and MuVo brands of MP3 players, even though they may be better in some respects than the iPod, such as the fact that Creative’s players come with built-in radio. As Sim Wong Hoo admits in the same statement: “Apple has built up a huge ecosystem for its iPod”. And Creative has not. That’s the difference. Not product specs.
Creative has won the battle. But Apple has won the war. Creative’s participation in the “Made for iPod” program means that the only real challenger to the iPod has become a supplier to the iPod. Sure, Creative is now able to take part in the growth of its competitor, but before long they will have to ask themselves for how long they will continue to be competition. When will Creative realise the futility of making its own MP3 players? All of this leaves Creative back to where it started: in the absence of the soundcard market which made it famous, it is looking for a new product to excel in. If Creative is smart it will use the US$100 mln to develop such products, and after that let its MP3 players disappear slowly from the scene.
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