Creative 2000 Annual Report Download - page 5

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But that’s not all. We intend to push the paradigm shift further by moving into a whole new business model for Jukebox-
type products. The next version of NOMAD Jukebox could easily come with twice the capacity, or store about 4,000 songs.
With this storage capacity, we could pre-load the Jukebox at shipment with, say, 2,000 songs from major labels. These songs
could be encrypted with business rules set by the content owners. For example, it could allow a free preview of any chosen
song and the user could choose to purchase it by just pushing a button on the new Jukebox. Or a “pay-per-view” micropayment
model could also be implemented. This would effectively deliver a virtual music store right to the palm of every targeted
user. The “electronic wallet” in the Jukebox could be topped up via the Internet. With the PC, equipped with our high-end
sound cards and connectivity to the Internet, many more new business models are possible.
Delivering the power of convenience and choice to consumers will reduce the incentive for them to choose the less noble
ways of empowering themselves. I believe that the NOMAD Jukebox will help to mitigate the copyright problems that have
plagued the industry. The potential for this type of product goes far beyond just selling a piece of hardware.
In August, Creative disclosed a very exciting two-year roadmap for our desktop audio products, but I believe downloadable
digital audio is just the first piece of an entertainment revolution which will eventually see movies, television, personal video
and photos, games, chat, and many more as yet-unimagined entertainment media streaming into your home and onto your
PC over a broadband connection.
And this is the other key trend which I believe will drive Creative’s business in fiscal 2001 and beyond. Broadband is the
enabling framework of the digital entertainment revolution and a key facet of our strategy. The research group Dataquest
predicts that between xDSL and cable, there will be over 25 million broadband connections worldwide by the end of 2003.
Through our Broadxent subsidiary (previously known as Digicom), and in partnership with companies like Nortel and
Lucent, Creative is providing the customer premises equipment (CPE) for user-installable ADSL in multiple markets. We
have also made strategic investments in companies such as Centillium Communications, whose chipsets power both CPE
and Central Office equipment. And we continue to seek new investments and partnerships in the broadband communications
space, as it is the key to the new world of high-quality, interactive, personalized digital entertainment that our digital
entertainment products and vision will enable.
I strongly encourage you to visit our web site, www.creative.com, where you can find both summary and detailed product
information, the latest downloadable driver updates to add features and functionality to your Creative products, and links
to our growing family of online destinations including Hifi.com, LAVA.com, and partner sites like PixAround.com and
MediaRing.com.
We begin this new era of Creative with an exciting vision, unprecedented breadth, a strong market position, and a solid
foundation for growth. I am deeply grateful to Creative’s staff worldwide, many of whom performed beyond their normal
scope of responsibility, for their hard work, flexibility, and speed in implementing the many changes the past year necessitated.
I am very proud of our team that has executed such a dramatic transformation. A whole new future is opened to us.
Sim Wong Hoo
Chairman & Chief Executive Officer