THE ZEN OF FIGHTING IPOD

Most customers of creative Technologies don't even know it. They're the millions who have the Sound Blaster circuit boards in their PCs that process the audio boomed through the speakers. The Singapore-based company has thrown its energies into digital music players, a field it entered well before Apple's introduction of the market leader, the iPod. Nonetheless, founder and CEO Sim Wong Hoo thinks his own products--the flash-based MuVo as well as the direct iPod competitor, the Zen Micro--can hold their own with Steve Jobs. We phoned the outspoken 49-year-old Sim, whose Zen playlist is heavy on Chinese and New Age music, at his Singapore headquarters.

LEVY: You sold more than 2 million music players in the last quarter of 2004. Was that expected?

SIM: We were planning for more, in fact, but because the ramp-up was so fast, it became more a logistical problem than a selling problem. So in the December quarter we had no problems selling everything that we could ship out.

Why do you think your competitor, the iPod, gets so much attention?

Steve Jobs is a personality that we all have to reckon with. His way of dealing with the media and all these things is legendary. But he was not the first to come out with this MP3. We started way back in 1999. We paid a lot of school fees for our mistakes along the way, but [our] company has transformed from a sound-card company into a company where we do all kinds of external products.

What is your take on Apple's iPod Shuffle?

We were preparing for a big fight. [We expected] they would come out with something very cool, very sexy. It turned out totally opposite, something like our first-generation product--no display, no radio, very simple. I believe we had this kind of thing more than three years or four years ago. You can say it's cool; I say it's plain-Jane.

You are among the first to sell handheld video viewers known as personal media devices. Will these catch on?

From all the initial feedback we have, this is a media type that people want to have. Maybe not everybody. Some older, more mature executives will say, "Hey, why do I want to watch this kind of thing?" But whenever I tell them they can bring all their photos with them, their perception changes. It's the same thing when we saw the first MP3 player. It may take one or two years more, but we are patient, and in the meantime we're selling a respectable number.

What are the advantages and disadvantages of being based in Singapore?

The advantage is, we come from a very conscientious culture. You tell our people what to do, they'll follow the rules, they'll do it. The downside is, they are not as creative. We fixed that by having a U.S.-based R&D team that's doing more advanced research.

You've worked with Microsoft since your company started. Do you think it can maintain its dominance?

I'm betting on the Microsoft camp. They want to win this whole MP3 war. With all the cash they have, with all the clout they have, they are going to win--if not the first time, if not the second time, the third time, and that's why we're working very closely with them.

In 1997, you acquired Cambridge SoundWorks. What did that bring?

A lot of credibility, particularly in terms of moving into the speaker world. In less than three years, we became No. 1 in multimedia speakers. We actually went with Dolby to get the first Dolby-certified PC speaker. Cambridge also has clock radios that are much better. Imagine putting an MP3 player, a jukebox and a hard disk inside, and you can listen to all the songs you want. The universe out there is much bigger than just the iPod or Zen Micro. Creative is a hidden gem, like Cinderella. There's a lot of inner beauty, a lot of inner strength out there, but not a lot of people know it. In the long run, Creative can become the princess in this area.

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