Originally posted by: Megatomic
Originally posted by: Brian48
Originally posted by: grabadude
Creative killed off Aureal (A3D) by using legal tactics and later acquired all of their patents and rights to A3D, etc
Absolute bullsh-t, but they did buy up what was left of the company after it folded.
No, it's true. I watched it all unfold in horror.
🙁
Well then you must have blinked a few times and missed a crapload of details. Sorry, but this is just the same old BS that's perpetuated by all the anti-Creative zealots on the net.
There's only one person who "marketed" the notion that it was completely Creative's fault for Aureal's failure, Pres/CEO Kip Kokinakis. You know. The guy that got
CANNED. What would you have expected for him to say, "Oh yeah, I completely screwed it up and drove the company into the ground"?
Although the on-going lawsuit with Creative certainly didn't help, it was NOT the reason why Aureal went out of business. The BOTTOMLINE is that they just didn't SELL ENOUGH sound cards to dig themselves out of the hole that they were in. The company tanked because their investers had had enough of supporting a company that was a consistent LOSER in terms of revenue and pulled out.
The year of the lawsuit (1999), Aureal had a net loss of $26.9 million, of which $6.4 was attributed to legal expenses dealing with Creative. Excluding the expenses from the lawsuit, this is still a massive beating of negative - $20.5 million, which in turn was even WORSE than the $18.5 million they lost for 1998. For FY 2000, Aureal was completely clear of the lawsuit (they won), but reported sales were STILL down from previous quarters. The company was on the fast track for yet another year of financial losses, only ths time, there was no Creative lawsuit to pin the blame on.
In addition to the lack of cash flow, they made several business mistakes as well that contributed to their downfall.
1. They never built upon their relationship with the major brick & mortar distributors (ie. CircuitCity, BestBuy, CompUSA, etc..). Online commerce just wasn't as prominent back then.
2. Similiar to 3dfx, they adopted an idea of vertical integration and invested a lot of capital in producing their own sound cards when they should have been out wooing more 3rd party vendors.
3. Related to item#2, this put Aureal in direct competition with their two largest vendors, Diamond (who had problems of their own) and Turtle Beach (now Voyetra). Not exactly a smart thing to do when you have an issue with #1.
4. The Aureal was a GAMING card and it was marketed heavily as such. Unfortunately, the gaming community only makes up a very small segment of the overall PC market, which was even smaller back then. This led to #5.
5. They spent WAY too much time going after the direct, retail customer when they should have been pursuing more OEM contracts. And when they did hook up with OEMs, they wasted more time and resources on lame projects like 3dfx's Brazo motherboard which never even saw the light of day.
Don't get me wrong, I liked Aureal back in the day. They produced a great, gaming card, but it was not without it's problems. Drivers were just as buggy as Creative's, CPU overhead was VERY heavy, and A3D 2.0 (which was proprietary) was NOT adopted by many games no matter how superior it was over EAX 1.0. It's OK to have a proprietary API if you're the dominate player in the field, but when you're not, it's the kiss of death.
Aureal is dead. I buried my MX300 a long time ago.