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Thursday August 24, 2006
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 Apple played a bit of a PR game today, announcing some bad news (recalling 1.8 million batteries) with some good news: the company has settled all of its patent suits with Creative. The Creative suit has been a dark cloud looming Apple's lucrative iPod business for almost a year now. Creative was awarded a patent on how you navigate music on a digital audio player. I never thought the suit would amount to much, but I was $100 million wrong. Evidently, Creative now owns the ability to sort by artist and navigate a hierarchical menu structure. If you are a DAP vendor, expect Creative to come knocking for patent fees soon.
The weird thing is that as part of the deal Creative will become a Made for iPod-approved accessory vendor. So now Creative will be making...what, iPod speakers? What exactly does that mean for the Zen?
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August 25, 2006 10:17 AM
I've made this case in a couple of different places, so why not again: :) I still think Apple could have smacked Creative around in court over this, especially in light of the countersuits they filed (which were, in my opinion, stronger than the original suit) but Apple had bigger fish to fry and the stakes were higher for Apple, who could have wound up with an injunction in their hands and not being able to sell iPods, versus Creative, who's ship has long since sailed and is now slowly sinking. The stakes were always higher for Apple, and it kind of makes sense that they just want to put this behind them and get back to selling and making iPods, but at the same time, I regret not seeing this battle go down in court, if for no other reason than to watch the failures of American patent and trademark law be put on display in a public court of law. Still, the money's no big deal to Apple, Marketplace reported that Apple's got something like 6.1 billion USD cash on hand for things like this, so now they have all of 6.08 billion, and Creative's stock has soared something like 35% in afterhours trading when the settlement hit the press. In the end, I think this might work out for the consumer-Apple's had the shot fired across its bow, even if it doesn't care, Creative now has an influx of cash that hopefully they'll use to develop better products (although word is they're going to have to license Apple's interface design back from them, so some of that hundred million is going right back to Apple...AND they get in on the "made for iPod campaign." Woo. Do I smell a future aqcuisition on Apple's part? Hmm...) that will force Apple to innovate and bring new features and products to market. Hopefully the consumer will win, and the digital media player market will keep humming.
August 25, 2006 12:17 PM
Now maybe they can put out products that can make them a profit (i.e. iPod accessories), although I doubt they will. Considering they're losing up to $100 million per quarter, this cash infusion from Apple isn't going to help them for very long. So it keeps them out of bankruptcy for another 3 months.