Apple to Pay £52m to Rival Creative

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Apple, whose iPod is still considered to the MP3 of choice by many, in a shock announcement yesterday revealed that it is to pay Singapore’s Creative Technology £52m in order to settle a dispute between the companies that could otherwise have escalated into a protracted and extremely costly legal battle.

The dispute centres on Creative’s patent-protected, filing system based interface driven by the album, artist and play-list principal. Creative, who released the world’s first MP3 player a few months before Apple’s player in October 2001 but whose market share has since taken a nose-dive had already sought an injunction with view to stopping Apple from shipping its players from its manufacturing plant in China.

Despite the fact that many saw this legal challenge as a desperate attempt by Creative to better its present loss-making position its shares saw a 36 per cent boost on the news of Apple’s payout. In return Apple has dropped a number of counter claims against Creative and will now also allow the Singapore based company to produce accessories for the iPod. Besides, with Microsoft’s Zune player just around the corner – a release is rumoured to be coming around Christmas – it would seem that Apple have other concerns on their mind, as it is widely believed that Microsoft’s offering – which would appear to boast wi-fi technology facilitating the remote sharing of music files – will cut heavily into Apple’s 90 per cent present share of the market (the impact Mircosoft has had on the games console market must surely serve as a startling reminder as to the impact MS can have on an otherwise single manufacturer dominated market sector).

The battle of consumer loyalties, as seen in the case of iMac vs PC owners, would appear as though it may be repeated in the MP3 market by the end of the year, and ultimately this can only help drive the technology forward, and unit prices down for the end-user.