Philips Electronics of Holland was one of the companies that turned down the offer to develop the predecessor of the iPod from its creator.Subiklim said:
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Apple Settles With Creative For $100 Million
- Thread starter chibianh
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theahnman said:
Yes, the consumer could care less. Apple reached the top of this mountain first. They got the loot first right? Or not, it just reminds me of something.
Evangelion said:
Alright, Menu system. But it's the same thing. You select songs (files) through groups of albums/artists/etc (folders/directories).
Of COURSE Apple was infringing on the patent if you assume it was a valid patent. I'm saying the patent never should have been granted because it's not something you can patent. I have a feeling that Apple possibly could have won this lawsuit, but it would have taken years of red tape, legal fees, etc, and they would be taking a gamble. Apple's taken gambles in the legal process before and lost (see: Microsoft GUI case). Steve doesn't want to go through that again, so he pays off Creative. Then, being Steve, he somehow uses his RDF to get Creative to join the licensing program, which has the potential to MAKE APPLE MONEY off of this deal.
Did Apple "win" this? Of course not. They're still out 100 million. But they also came out with some interesting deals that make this not a total loss.
And finally, to answer your statement in the first paragraph: This is EXACTLY why the patent system IS messed up. Because it DOES send a message of "hey we filed this patent for something blatantly obvious, give us some money" In most cases, it will be cheaper to settle. Thus companies end up using Patents, rather than products, as a money-maker.
Evangelion said:
Given that the patent is on metadata-based navigation, being able to slice the music files [on a portable player] by artists, albums, and playlists, do you really have an inkling of a suspicion that Microsoft's Zune player will not infringe?
I'll give MS the benefit here for the moment, but unless they've come up with a radically new way of interacting with your music that actually works, they'll either license/infringe on Creative's patent, or they'll produce a player no one knows how to use.
IMHO, it is pretty much a certainty that Zune will infringe on Creative's patent until Microsoft comes to licensing terms, just like just about every other player out there right now that manages more than a hundred megs of music does. The most likely alternative is a "flat" folder-based navigation system, which will pretty much equate directly to resounding market failure, and as stupid as MS makes us believe they are at times, they aren't that stupid!
100 mil might be a lot, but I think apple got its moneys worth, the got Creative of their back, they got a new accessory vendor, and they get to hold the pattent against other companies. I personally hope that more creative stuff becomes available for the mac, everyone seems to hate them but they make very good speakers, and their sound cards are very popular in the PC world amongst the gamers and even a few pro audio people. With so many products apple shouldnt leave a opportunity overlooked.
It seems like if you can't beat them join them.
But it would kind of make sence for Apple and Creative to make this disappear ASAP with a paltry gesture and "join" forces in the iPod war against Microsoft and the other crappy non-iPod players out there.....
But it would kind of make sence for Apple and Creative to make this disappear ASAP with a paltry gesture and "join" forces in the iPod war against Microsoft and the other crappy non-iPod players out there.....
Lollypop said:100 mil might be a lot, but I think apple got its moneys worth, the got Creative of their back, they got a new accessory vendor, and they get to hold the pattent against other companies. I personally hope that more creative stuff becomes available for the mac, everyone seems to hate them but they make very good speakers, and their sound cards are very popular in the PC world amongst the gamers and even a few pro audio people. With so many products apple shouldnt leave a opportunity overlooked.
Good points, I really thought Apple got off this pretty cheaply and if they wanted to settle so quickly it must be because Apple has a range of new iPod products being released very shortly.
At least this gets it all out of the way, hey.
Stu
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Phantom Rouge - The Artwork of Eleanor Hirst
Stu
____________________________________
Phantom Rouge - The Artwork of Eleanor Hirst
What many people fail to realize it Creative had some accessories that have adapters that work with the Shuffle and the ipod however this alows them to actually put the "made for ipod" tag on it.
chasemac said:What?
This is true I read this a while back and it was brought up today on a d.a.p site i frequent. Creatives TravelDock 900 speakers have an ipod shuffle connected to it on the box.
Kind of an interesting history note of digital audio players made back in 2004.
http://dapreview.net/e107_plugins/content/content.php?content.90
bloodycape said:
I still wish they made them for Apple. Looks like they might! Awesome!!!
New rumor!
bloodycape said:
OMO. They are still the best sound cards for PC today.
Non Pro audio that is.Well if they were already make some accessories for the ipod they might actually be tempted to make one or two products sound cards for apple. What I would love to see is Creative licensing their X-FI audo tech to apple to put in the ipod. I have been hearing nothing but good things about X-Fi.chasemac said:
Cameront9 said:
That might be so. But Apple has lots of questionable patents as well. Is the Click-wheel REALLY an innovation worth patenting? "We have a wheel, and we have buttons. Why not conbine them?". IIRC, they are also patenting the Mag-Safe, even though similar systems have been used for long time in pressure-cookers (IIRC).
Because Apple lost? Yes, patent-system IS messed up. But Apple is taking advatange of it as well. Now that Apple lost, everybody complains, yet no-one complains when Apple files for obvious patents as well.
Don't take things at face value
There seems to be a lot of misunderstanding about just exactly what the settlement means. But I would like to remind people not to take things at face value - Apple is smarter than that.
I suspect that it was Apple who proposed the settlement to Creative. More than that, I suspect it was Apple who dictated the actual terms. Creative had no choice but to accept, which was just as well because at first appearance, they look like the winner.
However, I believe Apple is playing corporate jujitsu here. The settlement is a strategic move that greatly benefits Apple in the long term even as Apple is willing to suffer an apparent loss of face.
Why?
Because the settlement gives Creative much needed ammunition (in both cash and legal standing) to go after every one of the iPod's competitors. You can be sure Creative is getting ready to send out letters to Sandisk, which has raced past them in the music player space this year. You can be sure Creative will be sending letters to iRiver.
And most certainly, you can be certain that Creative will be sending letters to Microsoft with regards to Zune.
Really, Apple was not playing from a weak position. There's no other way to say it, but that's a simplistic and naive interpretation. Patent battles are very, very expensive, lasting years and thousands of man-months of time. Creative not only had to fight Apple over its original patents, but simultaneously defends itself against Apple's countersuit (which were filed in a different state, just to make life more difficult for Creative's legal team).
Without any effort at all, Apple could drag the case through the courts for 5+ years and force Creative to cough up tens of millions of dollars in legal expenses. Creative simply does not have that kind of money, after blowing through $100 million in cash to write of unsold inventory last year. The company's cash position is very weak and the company was undoubtedly sweating blood trying to determine if it would have enough cash to see things through the end - an end which was far from guaranteed. Even if Creative won its original patent suit, they would have lost the countersuit for the same reasons.
The prospect of blowing $50 million over 5 years to pay lawyers for a net gain of nothing was weighing heavily on their minds, I'm sure.
I think what really motivated the settlement is the sudden appearance of Zune. That basically gave Apple the ace it needed to give it a four-of-a-kind. Why? Because while Creative might have been able to tough it out before Zune, the existence of Zune would basically kill the company before the case could wind through the court system.
I mean, we saw Creative's share of the music player market dive from 8% to just 4% in about a year. Sandisk, which was a virtually unknown brand in the music player space, went from nothing to 8% in a short time.
Even if Zune is far from being an "iPod killer", with Microsoft's marketing machine backing it up, I think any reasonable person could see that it is quite likely that Creative's marketshare would be dropping to nothing a year from now.
So Apple basically gave Creative an offer it couldn't refuse.
Settle with us now and forget this silly patent threat of yours. We'll give you $100 million to license your patents, if only because you got them first. And now that we're all family, why don't you go after some of our competitors. You'll probably be able to get just as much, if not more, which is a lot better than what you were getting trying to fight us with that Zen thing.
And if you want to let your pride get in the way, I don't think we need to remind you that Zune is just a few months away from demolishing what little is left of your company. A year from now, it will be iPod, Sandisk, Zune....everyone will have forgotten about Creative because frankly, you don't have any loyal customers like we do.
In fact, we'll be nice and help you gain some loyal customers, too. By making great iPod accessories, you'll be truly a welcome part of the family and more importantly, you'll have products that people actually buy. How about that!
Just remember, the $100 million is a kind of loan, of sorts. When you talk to that Microsoft fella, remember to share some of the payments you extract with us. We're all family, right?
Given that the writing was on the wall, I figure Creative realized that if you can't beat 'em, it was far, far better to join Apple.
There seems to be a lot of misunderstanding about just exactly what the settlement means. But I would like to remind people not to take things at face value - Apple is smarter than that.
I suspect that it was Apple who proposed the settlement to Creative. More than that, I suspect it was Apple who dictated the actual terms. Creative had no choice but to accept, which was just as well because at first appearance, they look like the winner.
However, I believe Apple is playing corporate jujitsu here. The settlement is a strategic move that greatly benefits Apple in the long term even as Apple is willing to suffer an apparent loss of face.
Why?
Because the settlement gives Creative much needed ammunition (in both cash and legal standing) to go after every one of the iPod's competitors. You can be sure Creative is getting ready to send out letters to Sandisk, which has raced past them in the music player space this year. You can be sure Creative will be sending letters to iRiver.
And most certainly, you can be certain that Creative will be sending letters to Microsoft with regards to Zune.
Really, Apple was not playing from a weak position. There's no other way to say it, but that's a simplistic and naive interpretation. Patent battles are very, very expensive, lasting years and thousands of man-months of time. Creative not only had to fight Apple over its original patents, but simultaneously defends itself against Apple's countersuit (which were filed in a different state, just to make life more difficult for Creative's legal team).
Without any effort at all, Apple could drag the case through the courts for 5+ years and force Creative to cough up tens of millions of dollars in legal expenses. Creative simply does not have that kind of money, after blowing through $100 million in cash to write of unsold inventory last year. The company's cash position is very weak and the company was undoubtedly sweating blood trying to determine if it would have enough cash to see things through the end - an end which was far from guaranteed. Even if Creative won its original patent suit, they would have lost the countersuit for the same reasons.
The prospect of blowing $50 million over 5 years to pay lawyers for a net gain of nothing was weighing heavily on their minds, I'm sure.
I think what really motivated the settlement is the sudden appearance of Zune. That basically gave Apple the ace it needed to give it a four-of-a-kind. Why? Because while Creative might have been able to tough it out before Zune, the existence of Zune would basically kill the company before the case could wind through the court system.
I mean, we saw Creative's share of the music player market dive from 8% to just 4% in about a year. Sandisk, which was a virtually unknown brand in the music player space, went from nothing to 8% in a short time.
Even if Zune is far from being an "iPod killer", with Microsoft's marketing machine backing it up, I think any reasonable person could see that it is quite likely that Creative's marketshare would be dropping to nothing a year from now.
So Apple basically gave Creative an offer it couldn't refuse.
Settle with us now and forget this silly patent threat of yours. We'll give you $100 million to license your patents, if only because you got them first. And now that we're all family, why don't you go after some of our competitors. You'll probably be able to get just as much, if not more, which is a lot better than what you were getting trying to fight us with that Zen thing.
And if you want to let your pride get in the way, I don't think we need to remind you that Zune is just a few months away from demolishing what little is left of your company. A year from now, it will be iPod, Sandisk, Zune....everyone will have forgotten about Creative because frankly, you don't have any loyal customers like we do.
In fact, we'll be nice and help you gain some loyal customers, too. By making great iPod accessories, you'll be truly a welcome part of the family and more importantly, you'll have products that people actually buy. How about that!
Just remember, the $100 million is a kind of loan, of sorts. When you talk to that Microsoft fella, remember to share some of the payments you extract with us. We're all family, right?
Given that the writing was on the wall, I figure Creative realized that if you can't beat 'em, it was far, far better to join Apple.
Evangelion said:
Ummm, Apple didn't lose. Settling is not "losing" in any legal sense.
I went into it in detail in my earlier post, but basically, Apple is happily giving Creative the teeth it needs to go after Sandisk, iRiver, and most importantly Zune.
Remember, as a result of this settlement, Creative is heavily incentivized to extract payment from every wannabe iPod killer in existence while agreeing not to so much as give Apple a dirty look any more. In fact, as Creative successfully collects licensing fees, it begins to pay Apple back.
It sounds like a $100 million loan to me.
chibianh said:
Please read my above posts.
The only things I'd like to add is that $100 million is a drop in the bucket for Apple. Apple has $10 billion in cash. That money isn't stuffed in Steve Jobs' mattress, it's being invested in short-term investment vehicles that is producing a good return. Even if Apple stuck it in a plain ol' savings account, the $10 billion would be generating around $300 million a year in interest alone, never mind the fact that Apple is adding $3 billion a year to their cash horde.
Secondly, Apple has sold billions of dollars of iPods over the years. It will sell untold billions of dollars more into the future.
For Creative to settle for a mere $100 million when the iPod is virtually guaranteed to generate tens of billions of dollars going forward is sheer lunancy if Creative was really confident about winning.
In fact, the fact that they settled for such a small sum shows that Creative was sweating bullets about losing it all. Apple was the one dictating the terms here.
Creative pays Apple back as it collects additional licensing fees? Sounds like a loan to me.
Creative joins the "Made for iPod" program and pays Apple a percentage of the revenue for iPod-only products? Doesn't sound like the kind of terms a confident victor would be making. Sounds more like a company trying to kick up a new revenue source in light of the fact that Zune is about to eat up its music player business.
The most interesting part is when Zune launches, and how long it will take Creative to sue Microsoft. Apple just turned a 90-lb weakling into a hired assassin!