Is Creative Labs in Trouble?

Ars Technica has an article up about Creative’s current financial situation in which they point out that the company has $396 million of inventory for the quarter, a number that is up from $184 million last year.

According to one of the company’s own reports, their total sales for the quarter were US$305.4 million, which if I’m understanding correctly, means that they’ve got more than a full quarter’s worth of product sitting in inventory slowly depreciating in value.

I have to wonder, then, just how much of an impact the number of quality motherboards available now that include on-board sound is having on Creative’s bottom line. My only real evidence is anecdotal, but it seems like the more people I talk to, the more I hear are simply sticking with their “sounds good enough” on-board sound.

I also have to wonder if Creative’s ability to buy out potential competitors and shelve their technology is causing a downswing in add-on sound card interest. While this business tactic obviously makes them the biggest name in the field, it also means that there’s no real competition to drive news items or reviews to keep the community interested in new product.

In many ways, I believe the competition between AMD and Intel or Nvidia and ATI keep interest in all their new developments high among consumers.

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