Creative 2000 Annual Report Download - page 2

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2
CHAIRMAN’S MESSAGE
Dear Shareholders,
In my letter to you a year ago, I outlined our plan to transform Creative Technology – retaining its strong core businesses
and its strengths in technology leadership, channel position, brand name recognition, and product line-up, but leveraging
these into a whole new world of computer-based digital entertainment, enabled by the amazing growth of the Internet and
high-speed broadband connectivity.
A year later, I am pleased to report that we have delivered on that transformation. You may have thought of Creative as
a sound card company or, as we’ve grown over the years, as a pretty well-rounded multimedia hardware company. But we
have transformed and developed into something quite different, and I’d like to introduce you to the new Creative. We are:
1) A Digital Entertainment product company. Our leadership position in digital audio allows us to have a natural and
smooth migration to digital entertainment because all three pillars of digital entertainment – namely digital music,
digital gaming and digital movies – are very dependent on good audio to enhance their user experience. We also
leverage on our strong brand name and global channel access to lead the way into this new and exciting digital
entertainment market, a market that could be potentially more than 10X our current market. Our leading products
now include not only our winning multimedia desktop products, but also the new Personal Digital Entertainment
(PDE) Internet Appliances, digital speakers and broadband communication devices. Combined, these products span
the 5 segments of digital entertainment we are focussing on – Digital Music, Digital Gaming, Digital Video, Digital
Photography and Digital Communication.
2) By any measure, a successful Value-added Venture Capital entity. It leverages on Creative’s strong brand name,
abundant technological resources, global market position and customer base of over 40 million users annually, to invest
in and add value to strategic partner companies. By helping to make these companies successful, Creative benefits both
operationally, as the partnerships contribute to our market leadership, and financially. We are happy to derive our
returns from either the operational benefits or investment benefits or both.
3) When you take the above two business models and couple them with the various Internet initiatives within Creative
such as Hifi.com, Lava.com and some B-to-B initiatives, you are actually investing in a New Economy Company. By
leveraging on our clicks-and-mortar structure, such as providing free Internet application services, free content and free
firmware/software upgrades to our users, we have raised barriers to entry into the new digital entertainment market for
others. For example, selling a NOMAD Jukebox is not just building a box (which is already much more challenging
than building a card), it is also about providing lifelong service to our users. Not many companies have this level of
resources and those that do may not be as focused as we are, nor able to take calculated risks by running very fast and
very lean. By the way, Creative is also profitable, which is a phenomenal attribute not found in most new economy
companies today.
During fiscal 2000, we solidified our vision for the future and our strategy to provide technologies, products, and services
that allow personal computers, with their enormous worldwide installed base, to be an optimal platform for digital entertainment.
To implement this strategy, we reoriented the company around four key areas:
Digital Entertainment Desktop Solutions – Creative’s Desktop Solutions products are integrally connected to the desktop
computer and make it an optimal platform for digital entertainment.
Products launched in this category during fiscal 2000 included the Sound Blaster Live! Platinum, Sound Blaster Live! MP3+,
Sound Blaster Live! X-Gamer, Cambridge SoundWorks Desktop Theater 5.1 DTT2500 speaker system, SoundWorks Digital
speakers, Blaster CD-RW 6424, Blaster CD-RW 8432, 3D Blaster Annihilator, 3D Blaster Annihilator 2, and Video Blaster
WebCam 3.