Creative Technology Targets The Internet

Singapore-based global PC sound card maker Creative Technology Ltd. has invested US$3 million so far and plans to spend another US$10 million in the current
quarter to exploit the Internet market.

In its first major move to take advantage of the
Internet, Creative, best known worldwide for its Sound
Blaster cards, said it will commit a further US$50 million
as venture capital money for Internet related start-ups.

Following the release of its fourth quarter results for
the period to end June, the company said it will restructure into five business units and that most of the divisions
should be operational under their new roles within six
months.

The five units, which includes the two main arms
comprising Singapore-based Creative Technology and its
US-based Creative Labs, will be restructured under the
creative.com name. The third unit will operate a mega on-line hi-fi store to
be called HiFi.com, it said.

Creative officials said in a
press briefing that HiFi.com, which will be launched in mid
October, will sell the company’s products and a range of
professional and hi-fi products, including offerings from
JBL, Marantz and Harmon Kardon.

This division now generates about US$10 million in sales
a year now. Like its sales strategy to date, HiFI.com will
initially focus on the US market and will later turn to
Europe and Asia.

There will also be a venture capital division to focus on
Internet related startups as Creative has to date invested
in eight such companies, including companies doing broadband
research.

There will also be the fifth arm specializing in
application service providers operating under the label of
inside.com, said Creative.

The company believes each of these five divisions have
the potential of becoming as big as what the existing parent
group is. But it didn’t want to forecast sales arising from
the Internet because it can be a “dangerous game,” said the
company’s HiFi.com chief Michael Sullivan.

After announcing it took a US$11 million charge for its
low-end graphics products in the newly released results, the
company said it will refocus on selling these cards via the
Internet.

The company said that this sales channel will help lower
selling costs compared with retail outlets as well as making
good products that have already been manufactured.

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