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Risky move as Creative goes up against nVidia

Audio king goes back to graphics after buying 3DLabs

Creative Technology, maker of digital entertainment products such as its SoundBlaster sound card, has agreed to purchase the remaining shares of graphics vendor 3DLabs for around £120.25m.

The announcement of yesterday's deal marks Creative's re-entry into the graphics market after moving away from it a couple years ago to focus its core technologies, such as audio.

Whether this about-turn is wise after the video card king, nVidia, finally killed off its nearest rival, 3Dfx, in 2000, remains to be seen.

However, the flipside of this is that, because there's only one player left the general consumer market for graphics cards, and because 3Dlabs has been traditionally a high-end card-maker, Creative could have a winning balance for high-end consumer cards, a lucrative area.

Financially troubled 3DLabs said in a statement yesterday that it would continue to supply, support and develop its product lines under the terms of its agreement.

Creative is already a shareholder of 3DLabs and has collaborated with the company on 3D gaming boards, graphics processors and other products.

3DLabs said that although the company has been experiencing financial difficulties recently, it expects the deal with Creative to allow it to make a splash with the upcoming release of its new graphics processors for the desktop.

3DLabs reported a 2001 fourth-quarter net loss of nearly £14.5m compared to a more modest shortfall of £2.6m in the fourth quarter of 2000.

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