Creative settlement only ‘drop in the bucket’ for Apple

Apple’s $100 million settlement with Creative Technology is only a “drop in the bucket” for Apple and removes potential future headaches for the company, according to one Wall Street analyst. “If Creative had been able to win any favorable rulings in the five outstanding lawsuits, Apple could have faced headaches including: further appeals, product injunctions, future and historical royalty payments,” said Piper Jaffray analyst Gene Munster. “Considering $100m represents 1.1% of Apple’s $9.2 billion in cash (at the end of the June quarter), we believe the settlement will prove to be the right course of action.”
Munster also said that he sees Creative’s plans to make iPod accessories as somewhat of a turning point within the company. “Over the last several years, Creative has been focused on head-to-head competition with the iPod and it appears that the company is now embracing the iPod eco-system as a way to grow revenue. We see this as a subtle admission by Creative that iPod does in fact dominate the MP3 player market (~75% U.S. market share according to NPD) and more may be gained from ‘coopetition’ than direct competition,” Munster said.