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Tuesday, October 5, 2010

Re-ignite That Creative Spark

Once a tech giant, Sim Wong Hoo's firm may be returning to its forte - engineering

Tucked away in one corner of Pearl Centre in Chinatown was a one-room office where a few young men were building a PC called Cubic 99.

PCs were the latest hot electronic devices back in 1984, and it was a big deal for a local company to build its own. Cubic 99 made waves at a local PC expo, PerCompAsia, where more than 200 units worth $500,000 in total were sold. A few days after the
expo ended on Nov 2, 1984, I went looking for the company,Creative Technology, and the manbehind it, Mr Sim Wong Hoo.

I met a boyish, bespectacled man who spoke enthusiastically for about two hours about Cubic 99 - a computer that could also "talk" in Mandarin and English because it
had audio features built into it.

That began my 26-year association with Mr Sim, who turned 55 recently. From Cubic 99 and other PCs, he built his tour de force - the Sound Blaster sound card. It blasted Creative to a dominant global position in sound cards, and turned Mr Sim into Singapore's first IT multi-millionaire.

Creative successfully listed on the Nasdaq stock market in New York in August 1992 - the first Singapore firm to do so. Mr Sim had wanted to list Creative simultaneously in the United States and Singapore. But the Singapore Stock Exchange had rigorous rules that the firm could not meet as a start-up. It was listed here only in 1994.
At the height of the company's success in January 1993, its market capitalisation crossed the $2 billion mark.

Despite his success, Mr Sim has remained a simple man. Now, as then, he wears a pair of generic-looking glasses and a Casio watch. Every day, he puts on a blue clear long-sleeved buttoned-down shirt, beneath which he wears a singlet.

He lived with his mother - who died in December 2006 - and a brother in a Housing Board flat in Bukit Panjang for years, before buying an apartment in the Dairy Farm condominium where he now lives.

His only luxury his Lexus cars, the first of which he bought in the US for more than US$40,000, paid for in cash. He now drives a Toyota Alphard.

But Mr Sim today is very different from the man he was in his early days, when he would freely give media interviews, each of which lasted for about two hours.
His passion for his products was infectious. At the end of each interview, 1 would feel excited about the products too.

About five years ago, he stopped giving media interviews. He told me in his last interview in 2005 that he did not feel Creative gained much from the publicity.
He has become a recluse, withdrawing from the public eye. He is recognised occasionally though, when jogging from his home to his office in Jurong International Business Park.

To write this article, I relied on my own observations, past interviews with him and his executives, Creative's corporate website, newspaper clippings and conversations with former Creative staff.

Mr Sim's road to success began when he picked up the harmonica as a teenager studying at Bukit Panjang Government High School. He had longed to play the piano, but as
the 10th of 12 children in a poor family, he could not afford this luxury.

At Ngee Ann Polytechnic, where he graduated with a diploma in electrical and electronics engineering, he formed a harmonica orchestra. It was this musical link - combined with his discovery of computers - during his polytechnic days that provided the PCs, he built his foundation that led to the Sound Sound Blaster sound card.

Mr Sim started Creative in 1981 with childhood friend Ng Kai Wa. Mr Chay Kwong Soon, another childhood friend, joined in 1986. Both Mr Ng and Mr Chay left in the late 1990s to pursue their own interests.

When he set up Creative, Mr Sim promised to make his first million within five years. It was the first of what he described as his BHAG: Big Hairy Audacious Goal.

He achieved it when the Creative Music System (CMS), a plug-in software, became a success with gamers and geeks. The CMS was a forerunner to the Sound Blaster.

Creative sold 1,000 to 2,000 of these sound cards monthly during this time, he recalled in a Business Times interview in 1992. It was clear that sound cards, not PCs, were the way ahead for the company.

He relocated to the US in 1988, in search of a bigger market for sound cards. A small Singapore team accompanied him there.

They worked in two time zones: During the day, they knocked on doors of US computer companies, persuading them to adopt the Sound Blaster standard. At night, when the Singapore office started its day on the other side of the world, they made long phone calls to report on business development in the US.

But they found time to play too. The team would play mahjong and Mr Sim would buy dinner. Four-in-the-moming drives from Sunny vale in Silicon Valley, where they were based, to Las Vegas for the weekend were also common.

Among the many doors that Mr Sim knocked on, one opened to Microsoft, which agreed to use the Sound Blaster as the multimedia standard in its Windows operating system. With Windows bundled in every PC sold at that time - and for several years after that - the Sound Blaster became a runaway success.

Mr Sim was named Businessman of the Year (BOY) in 1992, an award presented by The Business Times and DHL. However, his business faltered in the next few years. He was saddled with old stocks of CD-ROMs that he had to write off.

His turnaround was swift though, and the company was back in the black by 1997. In 1998, he won his second BOY award, this time as the comeback kid.

Creative built the world's first MP3 player in 1999. I was one of the few journalists shown the Nomad Jukebox, a silver-blue CD-ROM player-like device. It was bulky because of the hard disk it contained. It carried not the day's current hits but older evergreens like Que Sera Sera whose copyright had already expired.

Music wherever you go was a great idea, but Creative's messaging was poor and the product bulky. It was another company, which came out with a version half the size, in white and accompanied by a snazzy marketing campaign that succeeded. The product the iPod.

Launched by Apple iPod took the world by storm then till 2006, it sold units against Creative.

Creative could have some of Apple's spoils to go to bed with the ant. Apple liked the Nomad Jukebox and wanted to license the MP3 technology from Creative, it was willing to invest in a company if Creative had spun off its MP3 division. Instead Mr Sim spurned Apple's overtures.

In 2006, he sued Apple for infringing Creative's MP3 patents. Apple counter-sued. In the end, Apple settled the suit for US$100 million.

The Apple episode is Mr Sim's greatest failure. He held belief that consumers preferred technically superior devices to sexy, easy-to-use ones.

He also lacked an understanding of consumer marketing. He could not fathom why consumers would pay a high price for iPods when they could pay only half for what he thought was a better device with more features from Creative.

The man may be eccentric, but he is always generous. In 1985, he donated two Cubic computers each to Ngee Aim Polytechnic and the Singapore Association for the Blind for teaching purposes.

In 2006, he set up two foundations to which he donated $20 million. One was named Sim Foundation, but became the Sim-Tan Siok Kee Foundation in January 2007 in memory Qf his mother. The other was the Kuo Pao Kun Foundation, in memory of his good friend, the former playwright and theater director.

Today, Creative is a shadow of what it used to be. In its financial year ending August, the firm's annual revenue fell to US$275.3 million (S$362.5 million), from US$466.1 million a year ago.

It is now placng its bets on Zii a low-powered and low-cost computing platform aimed at a broad range of manufacturers, which can be used as building blocks for mobile phones and other electronic devices.

An interview last year with Creative executive Hock Leow gave the clearest road map for Creative's future. The company hoped that some manufacturers in China would license the Zii technology to quickly come up with products like set-top boxes, mobile phones or digital signage.

This strategy is a return to engineering - Creative's forte, and a much better bet than being a personal digital entertainment company that required consumer marketing skills and deep pockets, both of which it lacked.

The public face of Creative has disappeared with Mr Sim's refusal to engage the stock market and media. Its share price is now languishing at about $4, when at its 'peak it was more than US$29.

Although there are other successful IT entrepreneurs in Singapore, as this series has shown, most people can name only Mr Sim as the country's one and only IT personality. There is no one else who commands such top-of-the-mind recall. So how about it, Mr Sim? Breakfast?

Under Mr Sim's leadership, Creative Technology came up with products like the Sound Blaster Extigy, one of many products based on the Sound Blaster technology that rocketed the company to a dominant global position in sound cards; the Nomad Jukebox, the world's first MP3 player, built in 1999; and the Zii Trinity 3.SG concept smartphone, which is based on Zii - a new low-powered, low-cost computing platform that can be used as building blocks for mobile phones and other electronic devices.

via Sunday Times

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


Anonymous said...

Nothing new and in fact boring (as I have researched extensively and intensively into Creative before my purchases). However, it is a catalyst. Millions read the Sunday Times. Hundreds of thousands will notice the article and read into it. Tens of thousands are active traders. Most will still say forget it, wait and see, "still in major downtrend, no spike, others offer better dividend". Only hundreds will be keen to buy. Based on these 2 days' volume, at most dozens buy. But this is good enough to push the prices up. Due to share buy back in the past, the float is much lesser. Not easy to buy 50,000-100,000 shares without pushing the prices up significantly. This "rebound" is only a tiny part...don't get too excited...patience...

Anonymous said...

Jimmy, if you want to "help" create more interest in Creative shares, do publish trustudio's new taker. Buy when there is fear. Sell when there is greed. Creative shares still full of fear (perhaps reduced a tad), trading at distressed level, well below intrinsic value.

Anonymous said...

Creative's annual report is coming out within days. It should give an "insight". CEO sure has to say something. If you ask about singapore's tech success, I can only recall Creative (consumer), Venture (contract manufacturing), Chartered (already sold).

Anonymous said...

Another theory concerning the "rebound": Some insider news has spread. It could be preparation for some demo during AGM, it could be qmax/zii launch preparation. It could be CEO press button for go ahead to prepare launch. It could be even printing banners, etc. You know those "auntie" talk spread easily. Sim must have encountered the most difficult 2 years in his life. Zii is much harder and longer than he envisaged. But the direction is still inevitable for survival and correct. I may repost my "mediabook" thing at the "right" time.
Buy at your own risk and buy if you have deep pockets, willing to hold till 2012 and is a brave soul.

Anonymous said...

Sim is fitter than before. He prob. go jogging, go gym. He used to be quite fat.

Anonymous said...

I also researched into Singapore market. Don't worry about "evil" who paint bear market, fear, etc. Remember arond 1450 most analysts still recommend don't get anything. There will be corrections and swings. Stay long till ST index breaches 4,000. Bear market will inevitably come but not yet (not before you see Creative surges and turnaround). Don't be evil or wicked.

Varuna Singh said...

Nice read !

Jimmyboy88 said...

great! creative thx studio has a new taker :)

Anonymous said...

"Creative built the world's first MP3 player in 1999"

ha ha ha what a joke. who's that reporter?

heard of MPMan F10 and Diamond Rio PMP300 ?

creative's first mp3 player was nomad . nomard was manufactured by samsung for creative .

Jimmyboy88 said...

Mr Sim has rejected Grace's breakfast invitation via twitter :)

Anonymous said...

If I were him, I won't meet media anyway. Wait till the big things including mediabook are released...

Anonymous said...

The "wicked" one should redirect his energy and knowledge in a more positive manner. We cannot doubt his knowledge and efforts (though some still need brushing up). It will give him immense gain in the future. First thing he should do is invest in Creative while prices are distressed. Hopefully, we will see positive from him soon.

Jimmyboy88 said...

yea, nice move, the press will dig more info on those new zii products. talk to them when things have turnaround for creative

Anonymous said...

The writer is from SPH? Is she hinting something? SPH is collaborating with Creative on the mediabook?

Jimmyboy88 said...

what about mediabook? no news yet

Anonymous said...

Mediabook is confirmed!!!
Part of annual report 2010:
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.

"Share" means for shareholders to preview in upcoming AGM? For Jimmy to dissect.

Jimmyboy88 said...

yea, knew about ziieagle, will be covering a bit on that. someone ask me to be there at AGM. i think its important! but may not be able to go on that day :( can someone do a video or voice recording on the AGM? i dont mind to pay for your effort :)

Anonymous said...

Looks like Creative wants existing (patient) shareholders to benefit the most. 2nd wave of the first round of recovery coming. Recommended entry price sub 4.4 to 4.4+. Sorry, no more 4 (someone with great foresight already snapped it up). Recovery in Creative share price and bottom line is inevitable. Try going against the tide by borrowing scripts from say Phil. Securities and you will get burnt for sure. Try going against the tide by selling at a loss and you will turn "wicked/rotten".

Anonymous said...

I will be going (I am one of the top 30 shareholders I think). But I think important videos will be automatically published in youtube or their website. Jimmy, you got it wrong again. Qmax is 100% owned by Creative. It is shown now to highlight its importance. Hope you have gathered enough shares to earn long term huge profit. Patience...

Jimmyboy88 said...

creative needs to be above $4.80 in order to be in the major uptrend :)

Anonymous said...

Jimmy, if I am interested in 4.8 this kind of small gain, I will not be consistently around here. We are "days" away from 5.

Jimmyboy88 said...

what i meant that if it can break 4.80 then the sky is the limit :)

Anonymous said...

It is a matter of time 200 day moving average is breached. All the other averages are turning up.

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