The Business of Technology: Creative Labs
by Ryan Smith on October 2, 2007 5:00 PM EST- Posted in
- Bulldozer
Closing Thoughts
So between their business and technology, where does all of this leave Creative? Simply put, it would be difficult to argue they're not in a very bad situation.
On the technology side, almost all of their markets are either commodities or dying, and they're not the market leader in anything any more. Some businesses exist and thrive solely as a supplier of commodity components, but Creative isn't that kind of company. They need to be able to take a major part in a new high-profit industry to replace what they've lost from the sound card market, and they've yet to find something that can sustain them for long. Or to put things in another perspective: we don't see them as having the technology needed to carry the company.
On the business side, they're already in trouble from their technology issues. Their stock price is near record lows and they haven't been able to generate enough revenue to cover costs in a couple of years. Their saving grace at the moment is their Apple settlement, which has helped them turn a profit for this year at least. In the next year or so they may be able to take a piece of flesh from all the other major portable media player competitors, but there's a finite number of targets and as one-time payments the money won't last forever. For the time being Creative's business side can hold up the company, but it can't do this for very long, they need improvements on the technology side to bring the company back in to balance.
Looking at their research & development expenditures however, it paints a conflicting picture. A company in need of technological rejuvenation generally needs to be spending a lot on R&D, and this isn't the immediate case. FY2007 R&D spending was $64mil, compared to $77mil the year before and $82mil the year prior to that. We would have to go back to FY2003 to find a time they spent less on R&D, and that was one of their boom years. $64mil is not a small chunk of change to be spending on R&D (it's some 7% of all revenue) but it still leaves us wondering if they're going to be able to develop something to get the company out of its current rut. R&D spending only gets harder as revenue continues to drop.
In closing, it's too early to even be hinting at doom & gloom for Creative yet, but by now the first warning light has lit up. Things are not good for Creative right now, but there's a lot of time left. But can the company survive the dramatic shift required to make it? Only time will tell.
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Sabresiberian - Saturday, October 6, 2007 - link
After having trouble with Creative products a couple of years ago, I'm not a fan. Fine with me if they belly up, I'm not going to buy any of their products anyway.I am saddened to think the high-end graphics card might die out, though; I can't help but think on-board audio and software reliant audio means reduced quaility. I hope this doesn't happen.
Vista handles sound through software, by-passing the audio card? I thought audio was handled by DirectX, which largely bypasses the OS. This is definitely a step in the wrong direction.
Sabresiberian - Saturday, October 6, 2007 - link
Well after reading saratoga's comments, I see I may be wrong :) hopefully the SOFTWARE for audio will be developed to reach audiophile quality.AnnonymousCoward - Tuesday, October 9, 2007 - link
I don't think that's possible. When it comes to generating analog signals, extra physical hardware (board space, capacitors) allows for quality. A single-chip solution in an MP3 player can't compete with an Audigy card that's populated with components. There's a reason why high quality receivers are big and heavy.R3MF - Friday, October 5, 2007 - link
While I see lots of people cheering the demise of Creative (and i loath the company too), are people really willing to see the last proponent of Hardware Audio Acceleration disappear down the pan?The amiga way of having dedicated hardware to massively speed-up discreet computing needs is always the best way of doing things, and we know it which is why we buy GPU's, PPU's and APU's.
Using the generic and unspectacular power of the x86 CPU to shoulder the burden of any of the above tasks is stupid. Period.
I know that Vista currently has no acceleratable (sp?) audio API, which is making Audio DSP cards like the X-Fi look redundant, but there are two advancements in 3D Game audio that did not appear to be covered in the article above before the authors leaps to his conclusion. They are:
1) OpenAL - many games now use this API and I believe that Creative do intend that the X-Fi be able to accelerate this in hardware.
2) Vista SP1 is supposed to bring the Xbox XNA (sp?) 3D audio API to the PC, why could not Creative do with this as they have done with Direct3D/Alchemy.
There seems to be plenty of future potential for hardware acceleration of 3D Audio in PC gaming, and it seems cretinous for PC gamers to accept that the best place to process the 3D audio is within the CPU.
What do you think; should the article be updated to make mention of this?
saratoga - Friday, October 5, 2007 - link
Its not going away exactly, its just moving from proprietary cores on the PCI bus to additional CPU cores, and then onto specialized x86 hardware like AMD's Fusion and Intel's on die accelerators.
This is really nonsense. I've personally seen this strategy blow up because a product was designed to process fully in hardware (not even CPU cores, literally multipliers and registers in series). It works great until someone comes up with a new task, and then you're screwed. No such thing as a software fix when you've fabbed hardware for the task.
At best hardware works when software is too slow. But its always more expensive and less flexible. Always. As soon as CPU hardware gets fast enough, you want to move to software. Cheaper, more flexible, and in the end its almost always faster just because AMD/intel can afford better fabs and more engineers then the Creative Lab's of the world.
The Xfi is a wonderful example. Each core on a modern Intel CPU outclasses it by roughly a factor of 5-10, and the gap gets bigger every year. I worked out the math a while ago, and the most expensive Core 2 CPU had something like 100x the throughput of an Xfi. Its its infinately more flexible (full IEEE754 support, large cache, faster memory, no PCI bottleneck, standard development tools, etc).
I'm sorry, but you're just plain ignorant.
You're really confused about whats happening here. The problem isn't that MS is preventing Creative from using their hardware under Vista. They're not. The problem is people aren't buying XFIs in sufficient numbers to keep it going. Take a look at Valve's hardware surveys sometime. Creative's share has been dropping 20% a quarter for some time now. Sometime in 2008 the percentage of people running steam with SLI will likely surpass the number of people running an Xfi. Think about that for a moment.
The xfi will be the last of its kind because their is no market for an xfi successor.
gramboh - Friday, October 12, 2007 - link
First off I hate Creative Labs as a company.The problem with comparing the Core 2 to the DSP chip on the X-Fi in terms of computational power is you are ignoring the hardware that produces the analog sound signal (as a poster below points out). This is my problem with onboard, the sound 'quality' I get through my phones (entry level Sennheiser HD570) and speakers (Klipsch Promedia 4.1) is awful compared to what I get from my X-Fi XtremeGamer.
I almost went with onboard on my msot recent build but luckily there was a rebate on the X-Fi XtremeGamer so I got it for $75 (still a brutal, ridiculous rip-off).
0roo0roo - Friday, October 12, 2007 - link
well i just don't think that there would be no solution to that problem if creative died. there would be m/bs with better sound on the market, and there are always all the other board makers you can try. and atleast none of them would try to waste our time with more eax lock in stuff. and as others have already said, the other boardmakers succeeding as they have shows how many people get by without creative, or buy alternatives to spite that company.0roo0roo - Friday, October 12, 2007 - link
yup given the choice between spending on a bigger lcd/faster gpu/cpu and a creative soundcard, people will drop the soundcard. the difference in most games is insignificant compared to the other factors. and in cases where creatives proprietary nonsense isnt supported, theres nodifference at all. best to go with software audio for game development and give your entire customer base access to what you've been working so hard to create.DDG - Friday, October 5, 2007 - link
Finally, someone who shares my thoughts on this. Hardware-accelerated audio will always trump onboard audio period point blank. While Creative has made mistakes that's no reason to want to see the company disappear. Hopefully Creative can get their financial house together and continue on making great sound cards.Googer - Friday, October 5, 2007 - link
The author forgot to mention Creative's Purchase of 3d Labs put the company in to the discrete graphics card business. But it seemed they never bothered to do much in the way of product development and were mostly ignored.http://en.wikipedia.org/wiki/3Dlabs">http://en.wikipedia.org/wiki/3Dlabs