Saturday, October 20, 2007

state of homegrown Creative Labs - doom

was munching on fried rice for dinner, when i surfed to Anandtech for some tech updates.

Anandtech has published an article on Creative, painting an extremely gloomy picture on our very local and successful technology company.

sad to say, i have to agree there is a certain amount of mismanagement in Creative judging from their financial performance. If you see their yearly revenue, it was around $700-800m from 2000-2004. Then in 2005, Creative appeared to have turned their tide by earning an extra $408m from $815m. Since then, earnings have went to post-dotcom bust levels.

that's only the revenue - after deducting expenses, the company is in the red. It again appeared to be in the black this FY because of Apple's payout for the patent infringement. Otherwise, losses were potentially higher than FY2006.

Anandtech has cited unsuccessful attempts by Creative to broaden their product lines - we are all aware of Creative optical drives and graphic cards that disappeared from shops long time ago. To make matters worse for their audio division, it will be severely impacted from a new development in Windows Vista. Microsoft has developed a completely new audio stack for Vista due to the inherent flaws of the older stack used since Windows 3.1. This audio stack has removed support for DirectSound and made all SoundBlaster (even their very new X-Fi) cards useless overnight.

technological factors aside, i feel that Creative has been doing badly because of poor customer service. Poor customer service and technical support for everything has drove customers away. Creative is well known for sub-par sound drivers that are sometimes buggy and even then, the next revision took ages to be released. It has appeared 'lost' by Vista's new audio stack, and rushed for software fixes. It's unbelievable for a large company to be unaware of other complementary product developments.

poor management foresight and complacency is to be considered as well. How can Creative watch Realtek take away much of the onboard sound market over the past few years? What has Creative done to differentiate their product offering?

i hate to see Creative going downhill, but it is happening for sometime. Sim Wong Hoo has to do something about it, otherwise it will just sink into the past. Such as IPC and Compro.

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