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Creative blames Apple for flash shortage

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By LC Angell

Contributing Editor
Published: Thursday, October 27, 2005
News Categories: Apple

Makers of MP3 players are facing a shortage of 1GB flash memory chips, and at least one blames Apple and Samsung for the less than ample supply that the rest of the industry is fighting for.

“One of the key challenges we face in our MP3 business is an industry-wide shortage of 1GB flash memory,” said Creative president Craig McHugh. “Industry demand for high-capacity flash memory currently outstrips supply and this will impact availability of our 1GB flash MP3 players for the holiday quarter. The shortage of flash memory, according to industry analyst speculation, is primarily a result of a special deal that Apple has secured from a key supplier for the holiday season.”

It has been reported that Samsung is selling the majority of its flash memory supply to Apple at below market cost for use in the iPod nano and iPod shuffle.

Creative CEO Sim Wong Hoo said the deal is putting pressure on many smaller companies. “The MP3 market is now consolidating, but there is a shortage [of flash memory] because of the special deal we talked about,” said Sim. “The low-end [manufacturers] went out of business in the last few months because it’s very hard to face this pressure. If Creative is losing money then it’s very difficult for other companies to really fight in this battle.”

Sim said he doesn’t expect the deal to last long. “I don’t think the vendor [Samsung] is benefiting on it, so it’s really a one-sided deal,” he said. “I don’t think anybody else out there can get [similar terms]. That’s not the way the industry practices.”

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Comments

21

Sounds like advertising garbage to me.

All the big photo revview sites are predicing lower prices for FC and similar storage by Christmas with especially good buys after Christmas.

This is true on the high end (the super fast 4GB Lexar and SanDisk models) and the low end (consumer Sandisk models in 4GB), as well as other sizes across the board.  The only ones projected not to get lower are the dinky 64MB and 128MB FC they practrically give away today.

Take your pick of the big three or four photo review sites and track the news.  This sounds like little more than yet another competitor that’s getting clobbered by Apple.

The first example of Dell vs. Apple due to business strategies is a good one.  HP and Dell can crank out more low end consumer models than Apple ever will (uness you’re smart enough to want OSX that is wink)

Posted by Glockster on October 27, 2005 at 11:14 PM (PDT)

22

Well, it’s seems that when “CREATIVE” or another company does something underhanded, you don’t hear about it..but when someone bests them, then they cry.  Just my take on it.  I really don’t care were the memmory is comming from, I got my Video ipod, thats all that matters!  LOL.  By the way, if anyone would like check out my pod cast at:
http://www.3guys3beers.com

Thanks.

Posted by Anthony "Gorilla" on October 27, 2005 at 11:19 PM (PDT)

23

I dont think Apple is in this equation really ,the real question is if Samsung has sold its memory to them at below market value in which case i think the Korean goverment will have something to say about it as it could destabalise the economy and is potentially illegal within Koreas competition laws.

Posted by mark on October 28, 2005 at 12:49 AM (PDT)

24

AFAIK, buying a lot of parts to put in your product to sell isn’t an “anti-competitive business practice.”  I’t more like, “doing business.”

If they were buying all the flash memory and sticking it in a warehouse so no one else could have it, that would be anticompetitive.

If Apple’s buying enough flash from Samsung that it’s worth it for Samsung to sell it cheap, so be it.  That’s called “volume discounting.” 

I know it’s more fun to think about, but I don’t think Apple & Samsung are in a conspiracy to shut out the other mp3 makers.  The aliens posing as humans on their boards of directors have bigger ideas…

Posted by Paul on October 28, 2005 at 9:33 AM (PDT)

25

flatline repsonse - I guess logical thinking and the ability to read are two attributes which you lack (no real surprise though).  My original post was directed toward The Raven, a conclusion that any 3rd grader could have come up with.  But, 3rd grader knowledge is too much to ask for somone who goes around making “Conspiracy Theory” comments about Microsoft.  While you were so quick to insult The Raven for “not” reading your post correctly, it is most IRONIC how you turn the bend and fall into your own trap.

Posted by Huh on October 28, 2005 at 9:45 AM (PDT)

26

pcouture: good for you, and the perhaps the rest of us as well, “logically challenged” or not.

BTW, you apparently read and misquoted me as well; I didn’t say “almost none” (or ‘noone’, as you put it), I said ‘almost anyone’, in a context that’s different than how you interpreted it. If you consider the actual meaning behind the phrase in the context I used it, it was not meant as a broad brush, general characterization of everyone here, but an observation that the emotional, non-‘logical’ loons (the ‘fanboy’, usually) can and do leech out of the woodwork from just about any crevice one can imagine whenever anything anti-Apple is mentioned.

Surely a non-‘logically challenged’ individual such as yourself can appreciate the subtilty of that slighting nuance.

Posted by flatline response on October 28, 2005 at 10:00 AM (PDT)

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