Creative looks to digital entertainment products to boost bottomline
05 February 2003 1932 hrs (SST) 1132 hrs (GMT)
By Katherine Tay
Soundcard maker Creative Technology wants to develop more digital entertainment products to boost its bottom line.
The move is not surprising, considering that these products make up more than half of the company's sales today.
The digital entertainment market is a hard one to crack.
Companies not only have to consistently come up with the latest technology but also a good variety of gadgets. If they don't, they're out of the game.
Creative wants to develop more advanced digital audio players and speakers to boost its bottomline.
"We will broaden our speaker lines," Creative's founder Sim Wong Hoo Channel NewsAsia.
"I think the digital audio players and Nomad type of products are getting more exciting. They will replace the analogue type, be it flashback, or portable kind, or CD based -- more songs you can play on a CD. These are things we can move in and expand our base."
The company also wants to produce more hi-tech digital cameras.
But as for handphones, Mr Sim said, "When you look at the market, we're not in a hurry. When there's a demand, when technology becomes sufficiently matured, it can be done.
"To make a handphone is easy, but it's not our focus. If we go in, we've got to spend millions to build a brand, it's not the right thing, to fight an uphill battle."
But one thing is for sure, Creative wants to quickly expand in China.
"We actually opened up several fronts -- manufacturing, R&D, product development. Longer term we may do technical support," he said.
"But we've got to customise our products to cater for the Chinese market, taste and budget."
One example is Creative's Nomad 2 MP3 player.
"We actually re-targeted the Nomad 2, reprogrammed and incorporated an English learning feature and by doing that we suddenly have a MP3 player with the most advanced and best English learning system," Mr Sim said.
Creative plans to boost its research and development spending in China.
"We actually have a big R&D centre in Beijing right now, about 200 people. We will be investing in different companies in China. Some of these companies will have R&D facilities and we'll be helping them to do R&D, including in Shanghai, southern China and in future Qingdao," Mr Sim said.
Asked if computer software piracy in China worried the company, Mr Sim replied, "I think whether you develop or not develop software, it will be copied, but luckily we're selling hardware products, and hardware is not easy to copy."
What worries the company now is consumer market uncertainties, and of course, a possible US-Iraq war.
Despite this, Creative hopes to achieve sales of US$150 million to US$170 million in the third quarter.
It is counting on its digital entertainment products to help realise that.
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