SanDisk is finally officially launching its product line in
India. What do you expect from the market?
We are extremely excited about SanDisk's growth in India. So far SanDisk
products were finding its way into India through other South Asian countries.
Now with the official launch, we shall ensure the availability of complete line
of SanDisk product. We can guesstimate the potential available market in India
for the flash based devices (including MP3 Players, USB, mobile devices) to be
in the range of $100 mn. We are here for a long haul. We are already no. 1 in US
and Europe in the flash cards market, so there's no holding back on trying to
achieve the same in India in the next couple of years.
What is your go-to-market strategy?
We have appointed two distributors-Ingram Micro and Rashi Peripherals, to
sell SanDisk products throughout the country. Rashi Peripherals will sell USBs
and MP3 players, while Ingram Micro will sell SanDisk's Flash memory cards for
digital camera and mobile handsets. Initially, we shall be present in 12 cities
and gradually expand to 40 cities in the next 3 months. We shall start
merchandising in over 2,000 stores and increase to 14,000-plus by the end of
2007.
There are so many choices of MP3 players in the market today
with Apple's iPod, SanDisk's Sansa and now Microsoft's Zune, to name a
few. What do you think of your competitive edge in the market?
We are No. 2 in the US market for MP3 players and are continuing to expand
our coverage in Asia. The competitive edge we have stems from the fact that we
are leaders in manufacturing of flash memory cards. Largest part of the cost in
making flash-based MP3 players is attributed to the cost of the flash memory
card. SanDisk is able to drive down the cost of its MP3 players and offer a
unique competitive cost structure. Compared to others, Sansa MP3 players are
among the low-cost in the market. SanDisk is also keen on giving an open choice
of music services to its customers. Our recent tie-up with RealNetworks is one
such step. The Rhapsody Sansa MP3 player, which is available only for the US
market, is a unique offering that allows the Sansa customers to access
RealNetworks' Rhapsody online music service on a subscription basis. Rhapsody
happens to be one of the solutions but there are other music services available
on other SanDisk music players. This stands us apart from competitors like Apple
iPod, which is a closed environment restricted to only iTunes.
Regarding Sansa MP3 players, the Italian patents company,
Sisvel has alleged that some of SanDisk's MP3 players infringe on three
European patents licensed to the Italian company. Your comments on this issue?
Sisvel claims that our product infringes their patent but we would like to
reiterate that we have not infringed on any patent. Litigation on the issue is
still going on but we have not discontinued shipping of the MP3 players on the
global basis. We would let the legal course take its due time.
Give us an insight into your R&D initiatives.
SanDisk spends 7-9% of total revenue into R&D. (Revenue in 2005 was $2.3
bn, analysts forecast revenue in 2006 to be $2.8 bn) SanDisk has invested few
billions of dollars in Fabs in JV with Toshiba in Japan. At those Fabs, together
we are working on 8GB, 16GB chips, also 70nm and 56nm kind of geometries are
being developed. We have five design centers-Japan, Scotland, Israel,
California and India. Bangalore R&D is focused on state-of-the-art NAND
flash memory design and work together with our team of engineers from R&D
centres in the US and Japan. We are very pleased with the kind of talent here
and the ease with which they have taken up the most complicated design
challenges. The Bangalore R&D is working on such leading edge technologies.
We are also working on ASIC controllers.
Would SanDisk consider setting up a manufacturing plant in
India?
As of now we do not have any such plans and would like to focus on building
our leadership in India.
Malovika Rao
malovikar@cybermedia.co.in
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