Creative Losing to The iPod

Creative is losing the battle with Apple's iPod as the company reports the largest operating loss in over five years. Despite their best efforts at killing the iPod, Apple device outsells Zen and MuVo devices five-to-one, a less than ideal situation as Creative relies on music players for two thirds of its sales.

Besides slow sales, the company also had to deal with dropping flash memory prices.
"Creative tends to set aggressive expectations and build inventory," said Claudio Checchia, a Singapore-based research manager at IDC. "But they don't achieve the target average selling prices, have to keep cutting prices to keep up with the competition like Apple and battle falling flash memory prices."

In order to avert further losses, Creative's chief executive, Sim Wong Hoo, is now trying to lessen the companies reliance on Music players by shifting focus to new Sound Blaster cards for personal computers.

At the end of the day, there is no reason why Creative can't do well in the MP3 player space, even with Apple's dominance. Sandisk is doing well, despite only selling a fraction of what the iPod does. Creative's personal war with the iPod is what drove them into this situation. A company can function very well with only a very small market share, after all, Apple has been doing it for many years.