Creative outlook bleak as iPod runs the show
updated 03:30 pm EDT, Mon August 8, 2005
Creative\'s future bleak?
As Apple continues to build on the success of the iPod, . The company faces growing competition from competitors and building stockpiles of inventory, according to analysts quoted by Reuters. The report says that the maker of the Nomad and Zen MP3 players, which are designed to compete with offerings from Apple, Samsung, and Sony, will likely report a quarterly loss and write off unsold stock, after consumer demand softened and stiff competition hit margins. Creative is also facing competition from the cell phone manufacturers, such as Nokia, Oyj, and Motorola build MP3 functions into higher-end music cell phones. Despite record revenue and profits (as well as surge in stock price over the last two years) by market-leader Apple, analysts estimate that Creative's gross margin probably shrunk to below 20 percent in the June quarter, from 32.9 percent in the year-ago period, and compared with Apple's iPod margin of around 20 percent.
