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Creative channel strategy remains unclear

Digital products vendor silent on channel plans following recent changes

Creative channel strategy remains unclear
Creative narrowed its global losses last quarter, but still saw a dramatic slide in year-on-year sales.

Creative's long-term Middle East strategy remains unclear following the recent closure of its regional office in Dubai.

Although the digital entertainment products vendor continues to sell into the region, it is believed the Middle East business is now being run from Singapore after a decision was taken to shut the Silicon Oasis-based facility last quarter.

Creative only employed around eight people in Dubai anyway, while key figures previously associated with the Middle East business, such as Jordan Lee and Leonard Yap, had already moved to roles elsewhere earlier in the year.

It is understood that Creative continues to have representatives facilitating local sales in the region based at the offices of its main UAE distributors Ashley and Trigon, but the vendor has not responded to our requests for clarification of the strategy.

Partners speculate that the closure of the office was done for cost reasons, with some suggesting it follows a general slowing of the company's local marketing activities in recent times.

However, one said the move "had not made a significant difference" to the business, possibly because the company is understood to still have its existing Middle East sales channels in place.

Another channel source said Creative had seen its core MP3 business come under intense fire from Apple and suggested the company probably felt the limited size of the Middle East market meant the region could be just as easily addressed without the overheads of a local office.

Creative saw global sales slide almost 50% to US$72m during the three months to September 30th, with a reduction in revenues from digital audio players hitting it hard.

It admitted sales had been affected by both the economic downturn and its decision to "consolidate certain businesses" in order to focus on specific markets that provide the best opportunities going forward.

The company's bottom line did improve during the quarter, however, with net losses narrowed from US$41m to US$1m year-on-year.

Earlier this year, regional chief Alfred Lim said he expected the Middle East to generate growth of between 10% and 15% in FY2010. He also said the firm was shifting more focus towards products such as audio accessories and headsets to supplement sales of digital music devices.

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