Apple deal drives Creative income, revenues skyward
Made more money licensing MP3 player patent than selling MP3 players
You can see now why Creative Technology's now so pro-iPod - last month it announced a range of 'Made for iPod'-branded accessories. Its latest financial results, posted last night, show a massive upswing in revenues thanks, we'd say, to Apple's move to license Creative's key MP3 player patent.
The effect: an additional $82m net income during Q2 FY2007 on top of the $9.9m Creative earned selling its own Zen MP3 players, its X-Fi sound enhancement hardware, speakers and so on. The year-ago quarter yielded comparable earnings of $6.9m once investment gains made in both quarters are excluded.
Revenues for the period were $424.4m, up from $390.8m in Q2 FY2006. Apple's licence contributed $100m in revenues, making for a gross margin of effectively 82 per cent.
Creative sold 2.5m MP3 players in the quarter, a figure dwarfed by the 21m iPods Apple shifted in the same period. So you can see why Creative wanted that licence signed. Apple agreed to the deal in August 2006. Creative had been threatening Apple for some time, but finally placed the matter in the hands of the lawyers in May 2006. A few days later, Apple counter-sued.