Rick Myllenbeck              Patrick Ward
Director, Public Relations   Copithorne & Bellows
rickm@creaf.com              patrickw@sv.cbpr.com

Through a series of new product initiatives and joint development agreements, Creative will deliver families of audio and video communications solutions targeted primarily at home and home office PC users. These solutions will enable customers to call family, friends and business associates anywhere in the world and communicate regardless of the PC communications platform used by the receivers. These initiatives and agreements support Creative's goal of being a leading supplier of home PC audio and video communications -- videophone -- solutions and upgrades to the retail market. Creative will accomplish this by leveraging its extensive retail distribution network and its highly successful reputation for providing powerful and popular audio solutions and multimedia upgrade kits for the PC.

"Video provides a far richer, more fulfilling, enjoyable communications experience when compared to audio alone," said Sim Wong Hoo, chairman and chief executive officer of Creative Technology Ltd. "Families, home users, power users and businesses want to see people when they communicate remotely. Creative is continuing the 'visual revolution' it started with ShareVision, by providing high-quality, high-value visual communications technology to customers who can use their PC and standard phone lines for social interaction, entertainment, education, telecommuting and business-to-business video conferencing."

Creative's Market Vision: The Evolution of Personal Communication

Creative sees three segments emerging for audio and video communications over the next several years:

• Business-to-business communications and intra-business communications; video conferencing for productivity and cost savings
• Consumer-to-consumer communications; videophone use for enriched social interactions and entertainment
• Consumer-to-business communications; videophone use for consumer services and transactions

Creative believes that each of these three segments represent tremendous opportunities and is poised to offer standards-based technology to meet end-user needs in each area. Creative feels that the most significant wave of growth will be in the home consumer market which will require a simple, affordable PC video telephone that will enable people to enjoy and enhance their communications with distant family and friends, as well as on-line commerce and services. Creative also sees the small office, home office (SOHO) market as a tremendous opportunity as well, with customers wanting to improve communications with their corporate customers and partners.

"The industry's next big technological breakthrough is in the area of visual communications for the mass market --technology consumers have been waiting on for years," said Tim Bajarin, president of Creative Solutions a market research firm based in Cupertino, Calif. "With the widespread popularity of the Internet and increased power and performance, people are increasingly requiring more functionality from their PCs, including video communications. With its experience in the areas of sound, graphics and communications -- along with key partnerships -- Creative is in a strong position to drive the convergence of multimedia technology including video communications, resulting in more dynamic and empowering applications for the mass market."

Today's Announcements

Communications is one of three key business segments for Creative, the other two are Sight, which includes the successful Graphics Blaster line and the popular 3D Blaster; and Sound which includes Creative's industry standard audio solution, Sound Blaster. Today, Creative is making three video communications announcements in support of its overall Communications strategy. The first is the unveiling of its videophone technology for the Internet; the second is its demonstration of an H.324 videophone technology utilizing standard videophone communications over standard phone lines; and the third is an Internet multimedia telephony announcement with strategic partner NetSpeak.

• Internet Videophone Technology: Creative will integrate its advance video technology with its Internet telephony product, Creative WebPhone™, and be able to provide a high-performance, point-to-point, voice and video telephony solution for the Internet.
• H.324 Videophone Technology: Creative is leveraging its ShareVision technology to develop and deliver standards-compliant (H.324) videophone solutions for the home and small business. These affordable, host-based applications will enable users to easily see and speak to their friends, family and business associates over a regular phone line.
• NetSpeak Partnership: Creative is partnering with NetSpeak Corp., to develop Internet videophone technology that integrates advanced video and audio capabilities over the Internet. (Please see separate news releases)

Creative's objective is to be the leading supplier of home PC audio and video communications solutions," said Lung Yeh, vice president of the Communications and Internet division at Creative. "We want to offer a family of communications products that will do for consumer PC videophone and video conferencing what the Creative Multimedia Upgrade Kits did to help spur the multimedia industry."

These announcements build on Creative's strategic Communications and Internet direction which includes Creative's ShareVision PC3000 product, which offers desktop video conferencing capabilities with simultaneous voice, video and data over a regular telephone line; the Modem Blaster™ which was the first complete, Internet-ready modem and solution; and the Internet Blaster™ 33.6 PnP, which was the first all-in-one 33.6 Kbps Internet solution.

Overall Strategy

Today's announcement is the third in a five-part series of strategic announcements highlighting Creative's core technologies and underscoring its position as the world's leading provider of multimedia products for personal computers. Last month, Creative detailed the newest phase of its Internet strategy with the announcement of audio and Internet related solutions. Earlier this month, the company outlined its graphics strategy supported by the announcement of new Graphics Blaster™ solutions and the availability of its 3D Blaster PCI™ product. Creative will continue to make strategic announcements in the coming weeks in the areas of its industry leading audio solutions and Internet-related technologies. (Please see separate news releases dated September 24 and October 1)

More To Come

As Creative moves forward with its Communications strategy, its goal remains to be a leading provider of branded products and services that enhance the Internet multimedia experience.

To that end, Creative plans to develop a multi-function multimedia client and server system to support the client. Creative will also continue to develop relationships with key partners to jointly develop software content and hardware solutions. The company will unveil the next phase of its Internet strategy and additional solutions in the coming weeks.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

Except for the historical information contained herein the matters set forth herein are forward looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in the forward looking statements. Such statements are subject to the attached cautionary statements which are provided pursuant to The Private Securities Litigation Reform Act of 1995.

Creative Technology Ltd., is the world's leading provider of advanced multimedia solutions for personal computers, including sound, graphics, communications and video conferencing products. The company's Sound Blaster technology has been accepted as the worldwide standard sound platform for PCs, and the company's global distribution network is the most extensive in the multimedia industry. Creative is focused on enhancing the overall user experience by providing powerful, enabling, high-value technology for the mass market.

This announcement relates to products whose launch are in the United States of America. The product names, contents, prices and availability may differ elsewhere in the world according to local factors and requirements.

Sound Blaster and Blaster are registered trademarks of Creative Technology Ltd. All other products mentioned herein are trademarks of their respective owners and are hereby recognized as such.

Safe Harbor for Forward Looking Statements:

Except for the historical information contained herein, the matters set forth herein are forward looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in the forward looking statements. Such risks and uncertainties include, among others: potential fluctuations in quarterly results due to the seasonality of Creative's business and the difficulty of projecting such fluctuations; reductions in the cost of products sold by Creative, including increases in supply or declines in demand or prices for CD-ROM Drives, board and chip-level products, and software products; the short product cycles that characterize most of Creative's products; the increasing proliferation of sound functionality at the chip and OEM level; Creative's reliance on sole sources for many of its chips and other key components; the timely ramp, delivery and market acceptance of new products, including Creative's graphics accelerator, video conferencing, CD-ROM drive and communications products; the availability of operating capital and capital to refinance Creative's outstanding long term debt on acceptable terms; the volatility of share prices for companies in Creative's industry and the effect of those prices or events beyond Creative's control; the need to conclude the negotiation of and to implement certain planned and future partnerships that Creative believes are important to Creative's Internet strategy; and other risk factors described in Creative's fillings with the Securities and Exchange Commission over the past twelve months.