Macworld UK - Creative feels the pain as Apple music plays on

Apple-competitor Creative Labs, which once made sound cards and now makes MP3 players that try to compete with the hugely successful Apple iPod had more bad news.

It was caught hoarding a huge surplus inventory of flash memory - when there was a sudden glut in the supply of the product. The sudden shift from shortage to abundance slashed prices for these chips.

So Creative Labs was forced to write off the values of their inventory.

The result was, Creative Labs lost money for the third quarter in a row.
Macworld UK:

Creative's loss in the three months ending March 31 was $114.3 million, compared to a net profit of $14.8 million during the same period a year ago. Its sales slumped to $225.7 million from $333.8 million during the same three months last year.

It is a bad year for Apple competitors Dell and Creative Labs. No light at the end of the tunnel is in sight, at least for the rest of this year.

If and when 2007 ever does arrive for them, they will be staring an angry leopard right in the face.

Both Creative and Dell are suffering a little right now. The part of their product both companies make, the hardware, is not what is hurting them, ironically enough. They do not have good enough software to compete with Apple. What is hurting them is they get their software from somewhere else and they do not have a source for modern software to sell with their hardware.

Maybe they need to cut a deal with Apple to get some help with the software side of their products. Maybe they need to look at not just a second source supplier for their hardware components - but also their software components.

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