CEO Sim Wong Hoo Revealed ZiiEagle And ZiiBook In His 2010 Message ~ Creative Labs Zen MP3 Players Sound Blaster Card
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Tuesday, October 12, 2010

CEO Sim Wong Hoo Revealed ZiiEagle And ZiiBook In His 2010 Message

Mr Sim shared about more Zii products such as the ZiiEagle HD Movie Box which has a large collection of classic Chinese movies. Is Creative going into content provider business?

He also mentioned about the ZiiBook for kids to help them in their learning experience. Is this ZiiBook the mediabook that we are always talking about?


Dear Shareholders,
Fiscal 2010 continued to be another difficult and challenging year for Creative. Our financial performance continued to be adversely affected by the uncertain market conditions, particularly in Europe and the US.

The global economic environment remained uncertain, and the overall market for our products remained difficult and unpredictable.

However, with the aggressive restructuring efforts we have taken in the previous year, we are now a much leaner company with a lower operating cost structure, which allows us to weather these challenges.

In the previous financial year, with the onset of the crisis in the global financial markets and the resulting global economic downturn, we took aggressive measures to position Creative to meet the challenges in the tough period ahead of us. We undertook a complete restructuring of our worldwide sales and marketing operations, including closing or consolidating certain operations that were too costly or under performing. We significantly lowered our operating expenses by sharply reducing our international headcount and infrastructure costs, primarily in Europe and the US, even as such actions negatively impacted on revenue, resulting in substantially lower revenues.

During fiscal year 2010, we have continued with the restructuring and consolidation efforts, and worked towards building a leaner company with a lower operating cost structure that is more in line with resulting lower revenues.

The result of these efforts is reflected in the financial results for the year – significant improvements in gross margins and a large reduction in operating expenses, albeit with substantially lower revenues, and a significant reduction in net loss for the year.

Sales for fiscal year 2010 were US$275 million, 41% lower than the previous fiscal year sales of US$466 million. Gross profit as a percentage of sales came in at 25% in fiscal 2010, a significant improvement from 17% in fiscal 2009. Net loss for fiscal 2010 was US$38 million, compared to a net loss of US$138 million in fiscal 2009.

In my message to you last year, I shared with you the progress on the development of our Zii Platform and the ZMS System Module, and our plan to utilize the Zii Platform in a new line of our own Zii-branded products, including portable media players, speakers, audio solutions and other personal digital entertainment devices.

We had also announced our planned marketing program to sell these solutions, using our Zii Platform and ZMS-05 System Module, into the huge ‘Shanzhai’ OEM market in China. These enterprising OEMs can leverage on our state-of-the-art technologies and brand equities to rapidly bring a plethora of high quality and low cost Zii-powered products to market.

For the past year, despite the difficult market conditions, we have continued with our significant ongoing investments in research and development for products and services under the Zii Platform. While strong focus has been placed on the Zii Platform, we have also continued with the development and launch of new products in our other product categories.

In early 2010, we pioneered a new line of wireless speaker system, ZiiSound, with the launch of our “Pure Music Everywhere” campaign that was fronted by our comprehensive range of industry-leading wireless speakers, aimed especially at the mobile device market such as the iPod, iPhone and iPad. The lineup consisted of the flagship ZiiSound D5, the Inspire S2 Wireless, the Creative D200, the Creative D100 and the Creative T12 wireless speaker systems. These elegantly designed speaker systems effortlessly stream music from any compatible stereo Bluetooth devices, delivering the purest wireless audio listening experience in their respective classes.

We also introduced “Pure Listening” solutions that comprised in-ear earphones such as the premium Aurvana In-Ear2, the EP-3NC active noise-cancelling earphones, and the versatile HS-930i headset.

Expanding our Sound Blaster Wireless Ecosystem, we have introduced the Sound Blaster Wireless Headphones and Sound Blaster Wireless Rock Speaker, two new ways to enjoy music wirelessly inside or outside the home.

Looking ahead, for the current fiscal year, we expect to start seeing the results from our ongoing investments in research and development with the introduction of more new products and services under the Zii Platform, mainly in the second half of the
financial year. These new product will cover both our Zii-branded products, as well as OEM Zii-powered products.

In addition to continuing our investment in product research and development, to support the marketing and sales of the new products and services, we expect to incur additional sales and marketing expenses, in line with the revenue from such new products and services.

The Group is also expected to incur more capital expenditure in the current financial year, mainly by its subsidiary, QMax Communications Pte Ltd, as it starts to invest in a new island-wide fourth generation (4G) WiMAX Wireless Broadband network in Singapore. The new WiMAX network is expected to provide opportunities to introduce service offerings that can be synergistic with some of the new products and services under the Zii Platform.

Going forward, as we sharpen our focus on the Zii Platform, we will soon deploy Zii products that can herald the future of movie entertainment and future mobile learning. The ZiiEagle Vision will present a new, fun, effective and safe way to enjoy all future movies, while the ZiiBook will provide a captivating learning experience for our kids, both indoors and outdoors. I am very excited about this coming future and would invite you to share our Vision.

Thank you.
Sim Wong Hoo
Chairman and Chief Executive Officer

Please feel free to let us know in the comments section below.


Anonymous said...

Mr Sim shared about more Zii products such as the ZiiEagle HD Movie Box which has a large collection of classic Chinese movies. Is Creative going into content provider business?
-> That's why I asked you to go research on Qmax. I also said Qmax suddenly come into my equation. I wasn't expecting Qmax initially. I thought it was sold to M1.

He also mentioned about the ZiiBook for kids to help them in their learning experience. Is this ZiiBook the mediabook that we are always talking about?
-> I have talked a lot about mediabook. I believe there will be another higher end version that will come after the version for kids/students. The ZiiBook has been delayed but expect "creativity" in terms of software (besides the usual hardware). Software is always difficult for Creative (especially) and all other tech companies.

Stay tuned and enjoy...the greatest thing in life.

Anonymous said...

This "box" potentially can have many takers, starting Singapore, China, Hong Kong, Taiwan, Malaysia. If so, I have to upgrade Creative's intrinsic share value.

Anonymous said...

another toysRus product from creative.

Anonymous said...

Most of the market is not aware of Creative's upcoming products. If existing shareholders buy more shares now, they are likely to be well rewarded even in the short term, much more than the dividend declared. Looks like this is what Creative intends to reward shareholders.

Jimmyboy88 said...

content provider is a totally new playground for creative. i too thought qmax was sold to M1.. what happened?

Anonymous said...

Qala was sold, not qmax. There could be some conditions during the sale that are confidential.

Anonymous said...

Creative has been quiet with reason.
Sim Wong Hoo's vision is clearer now.

Jimmyboy88 said...

yea, creative sold qala but not qmax, kinda mixed up these 2. content provider is a more stable business then hardware provider. demand is always there

Anonymous said...

Shareholders and traders are "mixed up". Mostly think Creative will fail because they don't understand, don't want to understand or fail to understand. That's why prices are distressed. Upside potential is "tremendous".

Anonymous said...

Shareholders and traders are not "mixed up", they don't see the clear direction of Creative.

Creative started as one of the leader in sound cards after started moving into multimedia (Nomad series) it had been catching up with other foreign companies. It seem to loose its leadership since then.

Unless Ziieagle offer something different else it would be just another HD media box with hard drive built-in, what's new?

It's a good idea to bundle movies with media box, but the real question is which market segment is Creative targeting now? How many people really enjoy classic Chinese movies?

Is the US$100 Million budget spent entirely on acquiring the 688 movies' rights to bundled? How Creative justified and know that this would generate the profitable revenues from Ziieagles?

Anonymous said...

Still "mixed up". Market is always in a "flux". You decide yourself whether it will go up or down. I can give a 100 reasons and detailed analysis and you can still don't buy it. Market is merciless, don't expect consistent easy money (now is bull run, money is easy). Traders must take risk and know what they can lose. Go and get a free copy of the book on it and you will learn more or just wait for official announcement and the 2nd wave of the 1st rebound to come first. US$100mil is obviously a "marketing" figure. Management will have to judge what is the best long term interests for the group. They have made a lot of mistakes in the past, no doubt but have learnt. They are still going to lose money till 1st half 2011 (one of the many reasons people cannot wait to sell out Creative). I am not that keen on Qmax Wimax or ZiiEagle (it is new to my equation). I am more keen on ZiiBook and I know the huge potential it brings (there will be tie-up with education and Singapore is no doubt no. 1 in my mediabook recommendation day I may repost). E.g. you buy Osim at 5 to 10 cents when there is uncertainty, and "mixed up" traders and shareholders cannot wait to dump their shares even at huge loss. You sell osim at 1.1 to 1.13 when there is certainty, growth, profitability, analysts recommendations. There is huge obstacle convincing traders and shareholders about Creative now, otherwise it will not trade at current distressed levels.

Anonymous said...

hey share holder, be ready to get disappointed when this eagle start to fly . anyway some gimmicks like these are more than enough for you guys to go on a share buying spree ha ha ha.

hope you will be around to let us know the share price then.

Anonymous said...

The "wicked" one is not only "rotten" but also has poor "eyesight". I wasn't even excited about Zii Eagle or whatever. It wasn't in my equation. I have said before 3, 4 or 5 dollars a share doesn't mean anything to me. If you are keen in short term speculation, I can give you some tips.

Anonymous said...

For the "wicked" one only. He knows a lot about Creative, spends a lot of time on it but judge things too subjectively. Here's how to turn away from "evil" (redemption for past failures):
Recommended entry price for Creative shares is sub 4.4. Now is good time. Ready for 2nd wave of 1st round of rebound. Moving averages converging and turning up. Inevitable all moving averages including 200-day will be "cut". 5 likely to be breached during 2nd wave. 1 lot is 50 shares, I don't see it expensive (unless he has lost too much that time selling Creative shares at a huge loss). LimTan securites offer mtrade rebate for 1st 3 trades, virtually GST, CDP chages and cess only.

Jimmyboy88 said...

everyone is Anonymous here, its kinda of confusing who wrote what, anyway i beg to differs abit. creative hits 4.4 and is now consolidating and if it makes another attempt to cross 4.80 then its in the major uptrend and you can say the worst is over :)

the Ziieagle HD media box looks like some kind of test market product. i think creative is trying to see if it appeals especially to the chinese markets such as china, taiwan, hong kong, singapore etc.

Anonymous said...

As I read it the US$100 Million is the estimated production of the 668 Movies from Shaw Bros or the purchase price paid by Celestial for these 668 movies. It cannot be the budget from Creative for the Zii Box. The Zii Box is a HD Media player so it could not have such a huge budget.
These 668 movies various from 45 year old to 25 year old and most of the actors and actresses are dead! How many Gen Y would be interested in these movies?
Zii Box probably has better graphics and perhaps some extra features, however it is still a HD Media Player. So lets see by next week how it turns out. I hope it could generate new interests in Creative New Range of Zii products.

Anonymous said...

So surprise and disappointed that Creative is selling the Zii Box with 668 movies At S$888.00!

Understand there is nothing special about this Zii Box other than a media player with the old 688 Shaw Movies!

Gen Y hardly knows any of the actors and actresses and even then most of them are dead!

Who wants to sit and watch dead movies stars for whom they have almost zero nostalgic feeling!

Sorry to say that this is another BIG FIASCO FROM CREATIVE AFTER WAITING FOR ALMOST ONE YEAR FOR A Zii PRODUCTS. MR SIM PLEASE TAKE NOTE OF MY FEEDBACK AS I have been a creative fan and bought many creative products!

Jimmyboy88 said...

we are all creative fans
phew! S$888 is no joke, normally new products would price higher but i wonder how are they going to market this product?

Anonymous said...

The best way to solve "evil" problems is to quickly buy Creative stock. 2nd wave underway. Inevitable they will turnaround. Even THX Trustudio has big takers, more than their x-fi.

Anonymous said...

These very old movies have beautiful actresses and some handsome guys. However the actresses acting are very stiff and looks WAYANG TO GEN Y;Some of the Actors have martial art skills, however, because filming techniques at that time were not so advance so the Kung Fu fighting choreography scenes are at best PLAY ACTING! The VCD versions were on sale decades ago, but the quality is very poor; the DVD versions are sharp, colorful and beautiful; but for the Senior movie fans they would have bought some of the DVD versions of their favorite classic movies already!

Sigh !

Anonymous said...

Target for ZiiEagle: China market

Jimmyboy88 said...

S$888 in chinese yuan is quite a big sum too

Anonymous said...

Chinese Tv and movie industry are now churning out so many, many costume production movies with high tech cinematography and very interesting fighting scenes. It would be good if Zii Eagle can enable user to stream some these movies!

Convert S$888.00 into Chinese Currency it is a huge sum over RMB4000++! How many Chinese workers can afford it?

Anonymous said...

Jimmy, where did you get info it is S$888?

Anonymous said...

For Zii EAgle price just call Creative at Jurong showroom! And you will get the answer!


Anonymous said...

Ziieagle Movie box:
COMPLETE SHAW FILM LIBRARY BOX??? this is not true!!! And in terms of customer relations a dumb shot in the leg!!! there are some 80-100 movies from shaw mising in this box...WHY???
i do not know whether Celestial or Creative lost the overview over their own movies? but it is a sad disappointing announce a complete Shaw/Celestial movie box at a fair price and then not include ALL, i.g. the complete film library...

Anonymous said...

Ηave not heard about this ѕubjеct before nоw, I
ought to do so very soon.

My blog post;

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