Creative developed the first hard-drive-based digital music player, the Nomad Jukebox, in 2000, and filed for several patents. Apple launched its now iconic iPod music player in 2001.
Today, Apple has a 78% market share of digital music devices, to 10% for SanDisk and 4% for Creative, according to market tracker NPD Group.
Creative had sued Apple for violating its patents covering the preview screen to navigate music. Apple’s $100 million payment reflects a license fee and agreement to begin selling Creative-made iPod accessories such as earphones and headphones.
“Creative is very fortunate to have been granted this early patent,” said Apple CEO Steve Jobs.
“This settlement resolves all of our differences,” Jobs said, including the five lawsuits currently pending between the companies.
Creative lost $118 million in its fiscal year 2006, on sales of $1.1 billion.
NPD analyst Ross Rubin says Creative can expect its sales outlook to become even more competitive. Later this year, Microsoft is introducing the Zune digital music device, its attempt to compete with Apple.