Creative to bring challenge back to Samsung in mp3

By Matthew Henry

SYDNEY: Creative Labs claims it will retake the number two position in the mp3 market when its new business model hits its straps, and credits the loss of the number two position to Samsung as a symptom of its changing distribution arrangements.

Creative national sales manager, Nick Angelucci, acknowleged to today that the brand’s market share had slipped in recent months, but said this was due to disruption caused when the company parted ways with its former distributor.

“It has got to do with our distribution moving from Shriro to an in-house, direct model which has meant that we’ve been absent in the channel,” Angelucci said.

“We are now dealing direct with our retailers, but it has taken longer than usual to reestablish the links and reaffirm the major players in the channel that we are still here.”

Creative ended its relationship with Shriro in April this year after signing on with the Sydney-based distributor in early 2004.

Angelucci believes Samsung’s market share growth, which has seen the company ascend to number two behind the hugely-dominant Apple iPod, is likely being picked up in channels that Creative has let slip in the interim.

He also claims the new business model will in time enable Creative to work more closely with its retailers to develop a more competitive pricing structure by essentially cutting out the middle-man.

“We have paid particular attention to making the channel healthy for our range and in the process it is about negotiating and making our pricing right. We’ve been left in the dark a bit but we are pushing through – Creative is best known for our mp3 players and we are coming back with some super-hot products. For example, our 1GB and 2GB Zen Stone models have been strong sellers recently. Creative is still hot,” he said.

The process of changing distribution models has required Creative to renegotiate with some of its key accounts who were concerned that Creative had left Shriro – a split that Creative said was amicable and mutual at the time.  
“We had to calm a lot of fears and reassure [retailers] that we are serious,” said Angelucci.

“We have invested to change our model to a more direct model, it’s not easy and won’t happen over night but we have shown dedication to the ones we have signed up.”

Angelucci said with the channel arrangements coming together now, his brand would be ready to take the fight to Samsung to reclaim its number-two position. The company has new products hitting the market, including a credit-card sized Zen mp3 player.

“You’ve got to remember that we have been in mp3 since the beginning – since 2000. We have lost market share to others over the years, people like Olympus, iRiver and SanDisk – every six months there is a new number two but Creative bounces back,” he said.

“But for retailers who want to look long-term, we will still be there and we won’t take this lying down. I’ve always said it will be Apple, Creative and someone else leading this market.”

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