Creative cut workforce by half.
Reading this news reminds me of an article by CNA titled Being 'cheap and good' can be bad last year about how companies producing cheap but of good quality may not be the best way to go. Part of the article touches on Creative losing to Apple because it's cheaper even though it is of good quality. I wrote in with my comments below
I agree, the words cheap and good are rarely able to be placed within the same sentence because the first thing that comes to our mind is that cheap products equal poor quality.
But in the case of Creative Zen MP3 players, its failure is definitely not due to it being cheap, hence thought to be of poor quality. Big chunk of its failure is due to how it was promoted.
The market for MP3 players, by large, are for younger generations, from teenagers to young adults. By knowing the target, Apple have made the right decision by coming out with advertisements promoting it as something hip, trendy and very attractive to this group. None of its adverts mentioned technical specs because they know, in this market, being technically good is not as important as looking good. They got big artists like Black Eyed Peas that appeal to music lovers for that. We all know how endorsements can translate to profits.
I belong the young adults group and I own an iPod, no surprise here. The iPod don't sound that amazing and its functionality deserves some scrutiny but since it is not pertinent that I do my 'the most bang for the buck' research for something inexpensive such as an MP3 player, I would go to the one attracts my attention even though I know there are other players that can match iPod but with a cheaper price tag.
Branding plays a big part in making a product successful. Apple came into the MP3 market with shock and awe and now the word MP3 is synonymous with iPod, even though they may not be the best out there. But who cares when you own something cool?
So in short being cheap and good will not necessarily be bad but what is more important is to grab the attention of the target market and then the price no longer matters. Sometimes it does not have to be reasonable at all and that is why Apple is actually on the high side, price wise.
Apple can totally kill its competitors by slashing the price of iPods because by then, who would want to buy anything else when something as 'good' as iPod is cheap? I may just buy an iPod for my mom when that happens. It will definitely make her look cool during her morning walk around the estate. I would proudly go 'Hey, that's my Mama!'. But why would they want to do that when sales are all time high?
So Creative's failure is not because Zen players are cheap and good. They just had bad marketing and probably and expensive one too.