Creative's iPod Photo Rival Delayed

BetaNews has learned that Creative has pushed back the release of its highly anticipated Zen Micro Photo MP3 player to at least August, and now says that it cannot confirm retail prices for the unit even though it had publicly announced pricing in January at CES 2005 in Las Vegas.

The Zen Micro Photo won "Best of CES" at the annual consumer trade show, leading CEO Sim Wong Hoo to boast that "the success of the original Zen Micro has been so great that it was tough to deliver an encore in such a short period of time," claiming the judges "had never seen anything like it." Hoo told onlookers that the unit would be available during the second quarter.

However, since then, sales of Creative players have continued to trail those of market-leading Apple by close to a 3 to 1 margin in the first three months of 2005, far behind the company's expectations. Also, Creative's profits have declined 72 percent since last year.

For the March quarter, Creative's profit was $15.9 million compared to $290 million for Apple, much of which the company attributed to the iPod's success.

Pricing for the Zen Micro Photo was announced at CES to be $299 USD for the 5GB capacity and $349 USD for 6GB. But these announcements were made before Apple's restructuring of it's iPod Photo line in which it introduced a 30GB version for $349 - the same price as the Zen Micro Photo with only 6GB.

Creative banked the success of the unit on its screen - a 262,144-color 1.5" OLED. In comparison, the iPod Photo's screen is a 2-inch LCD only capable of producing 65,336 colors. However, it has become clear that Apple, although it may be at a disadvantage in features, intends to price its competitors out of the market.

"iPod momentum presents numerous problems for other MP3 manufacturers. As iPod's share increases, the competitive space for other MP3 manufacturers decreases, Joe Wilcox, senior analyst at Jupiter Research, told BetaNews. "Greater competition concentrated in a small space means non-iPod MP3 vendors may not be able to quickly turn over inventory, which could affect product roadmaps and manufacturers' flexibility to more rapidly release new models."

Creative would not comment on the reasoning behind the Zen Micro Photo delay. Representatives also would not say whether Apple's moves after CES or the company's financial situation has anything to do with the late appearance of the device. "We're targeting August and pricing is not confirmed," a company spokesperson told BetaNews.