SanDisk Takes On Apple With 8-Gig Flash-Memory Music Player

Published August 22, 2006

| Reuters

SanDisk Corp. (SNDK) on Monday introduced a new digital music player that stores twice as many songs as the popular iPod Nano for nearly the same price and cut the cost of existing models ahead of the holiday shopping season.

SanDisk, which is a distant second to Apple (AAPL) in the digital music player market, said it would sell a model of its Sansa player with 8 gigabytes of storage capacity enabling it to save up to 2,000 songs.

The new player will retail at just under $250, SanDisk said. By comparison, a new 4-gigabyte Nano is priced at about $249.

Prices for Sansa players with 2, 4 and 6 gigabytes of storage were cut by as much as 30 percent to a range of about $140 to $220.

"The most costly ingredient in a flash-based [music] player is the flash memory," said Eric Bone, director of audio/video product marketing at SanDisk. "Since we make the flash memory, we essentially remove the middleman and pass that savings directly to the consumer."

California-based SanDisk is the world's top supplier of flash memory data storage cards and has set its sights on raising its share of the digital music player market to about 30 percent to 35 percent from about 10 percent.

Demand for flash memory chips is expanding rapidly as their ability to retain data after power is shut off make them an ideal storage device for portable electronics.

SanDisk is in the midst of expanding production, announcing earlier this month plans with Toshiba Corp. to spend nearly $5 billion building a new flash memory plant in Japan. The company has also agreed to buy memory card developer Msystems (FLSH) for $1.55 billion.

Apple reached agreements last year for a long-term supply of flash memory with Toshiba, Intel Corp. (INTC), Hynix Semiconductor Inc., Micron Technology Inc. (MU) and Samsung Electronics Co. Ltd.

Shares in SanDisk rose 90 cents to $52.07 in early Nasdaq trading. Apple shares fell 2 percent, or $1.35, to 66.56.

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