(Nikkei BP Group)
(No.1 High-Tech News Site in Japanese)
| Creative Technology Excels in PC DVD-ROM Market
December 29, 1998 (SINGAPORE) -- Creative Technology Ltd. and its chairman
Sim Wong Hoo have emerged as among Singapore's most admired corporate
groups and executives, as the company has pioneered a new industry in
the face of the regional economic slump.
|Creative Technology produces multimedia peripheral equipment.
In 1998, the company set the pace for the DVD-ROM market by defining
the price and performance of the devices. Also, it re-entered the graphics
card market with new products and delivered its new audio card in Sound
In addition, chairman Sim was honored as Businessman of the Year in Singapore
for "masterminding and executing a spectacular corporate turnaround"
after its losses in 1996.
The government recently appointed Sim to head one of two working committees
under the Technoprenuership (technology entreprenuership) 21 Ministerial
Creative's net income for the fiscal year ended June 1998 reached a record
high of US$184.9 million, for a year-on-year increase of 15.4 percent.
The company reported net income of US$21.5 million for the quarter ended
September 1998, compared with US$51.6 million for the same period a
Analysts said that the company overcame difficult economic conditions
in several of its major markets.
One of its strengths is its lead in the PC DVD-ROM market, the analysts
said. After launching its first-generation DVD-ROM drive in March 1997,
priced at around US$400, the company followed in October 1998 with its
second-generation PC DVD Encore 5X, carrying a retail price of US$199.
The company, which also sees the market moving toward PC DVD-RAM technology,
recently launched a DVD-RAM kit for US$499.
"Creative continues to price DVD products at close to break-even in order
to preempt competition, stimulate demand and generate opportunities
to sell high margin audio products by bundling them with DVDs," said
Lucas Ward, an analyst at Goldman Sachs.
"Creative is focused on making its PC-DVD technology more affordable,"
DVD is becoming more popular because Creative has pushed prices below
US$200 and the company hopes a sell more than 100,000 units a month,
Sim also said.
Also, the company announced at the COMDEX/Fall '98 show in November that
it will enter the graphics market again, despite its earlier failure
and a string of losses.
The company said that it expects to generate about 15 percent-20 percent
of its sales in the current quarter from graphics cards and that it
will stress sales of cards to OEMs. It arranged collaboration with U.S.
PC maker Gateway Inc., for supplying graphics solutions.
"Creative seems to be aiming very squarely at the high-end," Ward said.
He added that it has unveiled offerings like 3B Blaster Banshee, Voodoo2
and PCI products.
The Singapore government has invited Sim to help bolster the nation's
"For the private-sector committee, we wanted a chairman who is a visible
symbol and who has built a successful entrepreneurial company, and Sim
has done that," Deputy Prime Minister Tony Tan said.
Tan made the comment when announcing Sim as head of part of Singapore's
Sim is expected to work closely with the National Science & Technology
Board to assist the government in realizing its vision.
(Joseph Rajendran, Asia BizTech Correspondent)
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