The outfit's flash-memory factories and penchant for feature-packed, low-cost players may help its fight against the iPod juggernaut
Competing against the iPod has been known to cause corporate injury. Take Creative Technology, the Singapore-based consumer-electronics company, for example. Creative for two years has tried to position its products against Apple Computer's megahit music player but has had a tough time of it, reporting a loss for fiscal 2005 and numbers in the red for the second quarter of this year. Rio, the brand name that effectively launched the MP3 player category in the late '90s, exited the business last year.
Apple certainly isn't making it easy for its competitors, especially after locking up exclusive supply contracts for flash-memory chips from vendors such as Samsung, Hynix Semiconductor, Toshiba, and a newly formed flash-memory joint venture owned by Micron Technology and Intel.
PIE-IN-THE-SKY GOALS? So of all the things Eli Harari could be doing, why would he be leading his $2.3 billion company SanDisk into what appears to be a no-win attack against Apple's dominance of the digital-music player market?
Because in the market for those players that use flash memory -- such as Apple's iPod nano and shuffle -- Sunnyvale (Calif.)-based SanDisk has something that most other suppliers don't: Its own factory for making flash memory. That means SanDisk can supply itself with one of the most expensive and critical MP3 components at cost.
Of all SanDisk's flash-memory chips, 70% come from three Japanese chip factories it jointly owns with Toshiba. The remaining 30% come courtesy of its own supply contract with Samsung. When demand is high, Samsung's capacity fills in the gaps. When demand is low, the Samsung capacity is the first to be cut back.
NICE PRICING. That's going to give SanDisk's newly released Sansa brand of players a competitive price on retail store shelves. Harari says the plan is not necessarily to compete directly with Apple, but to offer an alternative player with a wide range of features at a price where Apple only offers its stripped-down iPod shuffle, which has no screen.
The Sansa e250, for instance, strongly resembles the iPod nano, and is roughly the same size, but can play videos, has an FM radio, and works with several subscription music services, including RealNetworks' Rhapsody, Napster, and Yahoo's Launch, among others. With two gigabytes of capacity, it stores about 500 songs -- at a price of $180, about $20 less than the 2GB nano.
At the high end of SanDisk's range is the e270, which stores six gigabytes at a price of $280, about $31 more than Apple 4GB iPod nano, which sells for $249. Other Sansa-branded players include the m200, which at $59 stores as much music at the iPod shuffle, but for around $10 less. [buisnessweek]
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