The Milpitas, California-based company plans to debut its Project Nomad line of portable digital audio players at this weekend's New York Music and Internet Expo. Pricing for the new audio players was not announced.
The product is set to compete with Diamond Multimedia's Rio, a handheld device for playing MP3 audio files, analysts said.
The Project Nomad product line consists of compact portable digital audio players that enable the user to download MP3 content from the Internet or to record from existing CDs, the company said yesterday.
Creative is looking to exploit the success of its Sound Blaster PC audio standard--the company claims there are more than 75 million installed--to push Nomad into the increasingly competitive MP3 market.
"The market has been waiting for Creative to 'enter' the portable digital audio category based on its award-winning digital audio solutions," Sim Wong Hoo, chairman and chief executive officer of Creative, said in a statement.
"Moving into portable digital audio via the Internet would definitely be a bonus for Creative," said Winston Lim, analyst with Credit Suisse Boston. "This next wave of digital audio moving away from the PC to the living room and other forms of entertainment could be phenomenal for them."
Creative claims its expertise in the music industry through its E-mu/Ensoniq subsidiaries will give it an edge in the digital audio market.
The company is banking on its Creative Inspire Internet-based digital entertainment initiative to greatly broaden distribution of digital audio content. With this, the company said it plans on offering hardware, software, content, customization, and delivery capabilities as well as helping establish key standards for digital audio entertainment.
Creative's march into the MP3 market is "a significant move as it shows they're moving away from sound cards into other lines,'' said Terence Khoo, technology analyst at Vickers Ballas Investment Research.
Some analysts have been concerned that Creative could be headed for a flat third quarter as its core audio business has faltered on increased competition and a lack of new products.
"I'm sure they'll be better than what their competitor Diamond has come up with and that it'll be a hit,'' Khoo said, referring to the player already launched by Diamond Multimedia last November.
Creative said it intends to take its online expertise, derived from its Inspire site--which has more than 400,000 registered users--and apply it to a new Web presence supporting a myriad of digital audio formats and content. The company also plans to recruit a number of partners to provide spoken word and digital music content.
Some of the partners will provide licensed MP3 content and others will provide encoding and conversion technology. The partnerships will be announced at a special press conference this weekend at the New York M&I Expo.
Reuters contributed to this story.