Creative Plays Pricing Game, Tosses $40 Stone at Apple

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Creative Technology is now tossing a $40 portable MP3 player into the ring, an aggressive pricing play aimed at lower-end buyers.

The player, dubbed the Creative Zen Stone, offers 1GB of storage and a fairly small size.  The length is just over 2 inches, the width is 1.5 inches, and the thickness is a mere 0.5 inches, dimensions that seem more like a pebble than a stone.  Regardless, the sizing puts the Stone is a class of very small players, a space that includes the recently-updated iRiver Clix and the heavy-selling iPod shuffle.  That segment has already produced strong gains for Apple, and most recently powered a substantial portion of iPod sales during the first quarter.  That has Creative taking notice, and pushing a potential consumer sweet spot.  “The Creative Zen Stone, at just $39.99, opens up a huge new market for MP3 players,” said Sim Wong Hoo, chairman and CEO of Creative during a product unveiling.  “Whether it’s your only player or a second player to take with you anywhere, the low price lets you think of MP3 players in a whole new way.”

Entrants like the Stone may also signal a broader devaluation in portable media, a trend that could eventually lead to a rather commoditized and disposable product.  Currently, consumers seem willing to commit heavy dollars to higher-end players, and Apple is about to test its powers with its near-$600 iPhone next month.  But the smaller segment is still evolving, and cheaper flash storage prices will continue to produce aggressive devices like the Stone.  Meanwhile, Stone buyers will have a selection of six different colors, including black, gray, yellow, red, pink, blue, and yellow, part of a prolific product output from the Singaporean consumer electronics manufacturer.  The product introduction closely follows a disappointing quarterly earnings review from Creative, a result driven by softer sales in Asia and North America.