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Wednesday, December 22, 2010

Time to get creative, Creative



IF there's a cruel parallel to be drawn between the target audience of Creative Technology's latest gizmo and its current plight, it would be that the company is becoming increasingly disconnected. Instead of taking random pot-shots, Creative should focus and hit hard only at the segments that can truly make a bottom-line difference.

Last week, Creative offered its own interpretation of media distribution with the release of the "ZiiEagle Treasure Box". Unlike the current crop of media players in the market, users can't load their own content onto it and play them back on their living room TVs. What they do get is a prepackaged, digitally-remastered collection of over 600 classic Celestial Chinese movies packed into one plug-and-play set-top. Creative has explicitly said that the product would suit those in their 50s who relish a bit of Chinese movie nostalgia. While there is certainly such a niche market, the revenue impact from such a segment would certainly not be material enough to reverse its ailing fortunes.

More importantly, this is a case where Creative may have gotten the segmentation right, but the execution completely wrong. The ZiiEagle is aimed at a generation that is completely unused to the concept of digital media. It's hard to not notice the glaring in congruence in peddling technology to a market segment that is notoriously tech-averse.

The market potential for Creative's ZiiEagle is further limited by the fact that it is "closed system". Think of it as a souped-up DVD player with a f1xed disc bundle. Consumers get the $888 box with all 668 movies, or nothing at all. This goes against the prevailing norm of allowing consumers to pick and choose the digital content they wish to consume. Even pay-TV operators accustomed to delivering programmes on a fixed schedule are now selling on-demand movies on an ala carte basis. Throw in the fact that the new gadget is vying for limited connectivity space with other living room essentials such as DVD players, game consoles and pay-TV set-tops, and its allure is further diminished.

Under the hood, Creative's new hardware is powered by its future product messiah - the Zii processor. However, a video player such as the ZiiEagle may not do the chip enough justice and help it take ) flight. It does not show off the Zii's ability to handle functions .such as multi-tasking, complex graphics rendering or power management, the very qualities that could help convince more companies to adopt the Zii platform.

When juxtaposed against the plethora of other recent releases such as touch screen tablets, the ZiiEagle serves up more signs of a company trying to play catch-up. Creative is already trailing in the market for music and multimedia players, its main source of revenue. Apart from being crammed with competitors, the growing popularity of smart phones will further diminish the need for such standalone devices. Its sizable patent trove and accompanying royalties does buy Creative some time, but there is no denying that it will need to unearth new revenue streams.

The company has its past success rooted in sound engineering and even now, it still makes some of the most bang-for-the-buck audio accessories in the market. Perhaps revisiting the past could aid its quest to f1nd a brighter feature. Given the economic resurgence, there should be some merit in spinning off a high-end audio brand. Toyota has done it with Lexus. In the technology world, Hewlett-Packard and Dell have done the same with Alienware and Voodoo, their high-end PC brands for demanding, hardcore gamers.

Software innovation is another area that would be worth exploring. Apple is the runaway leader in the audio player market, but the company's hardware (iPhone, iPods and iPads) and software (iTunes) are interdependent. Given the rise in alternative mobile operating systems such as Google's Android, there is a clear need for a more versatile media management software. Users would welcome a tool which could support multiple users within the home on a shared computer, as well as one which could sync playlists with different phones and tablets,

Six years ago, Creative dreamt of taking on Apple, but it failed to claim the mantle of iPod slayer. Since then, the company has stopped short of unveiling more grand ambitions. However, behind every success is typically a succession of failures. Even Apple had its fair share of stumbles before hitting the consumer jackpot.

In business, it's always better to dream big and fail, than to do the reverse of failing to dream big.

via Business Times

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