Mary Jane Irwin of Forbes has a very interesting take on Sansa’s Music Empire. Check out this article:
SanDisk’s Music Empire
BURLINGAME, CALIF. - With the release of each shiny new iPod, tech pundits hail Apple as the king of the digital music space and mock Microsoft’s attempts to penetrate playlists with its Zune. The clash of these two titans generates a lot of noise, silencing any chance of SanDisk, the unlikely No. 2 digital music player maker, claiming headlines.
But recently, the Milpitas, Calif.-based flash memory company has been in the news for rejecting a $5.8 billion hostile takeover bid from Samsung on Sept. 16. And on Monday, SanDisk launched SlotMusic, an initiative aimed at supplanting compact discs with flash memory cards. SanDisk has partnered with EMI Music, Sony BMG, Universal Music and Warner Music Group to distribute albums on one-gigabyte cards that can be used in any device, such as a cellphone or MP3 player, with a USB or microSD slot.
Despite the lack of public attention, SanDisk’s Sansa music players have garnered 10% of the digital music player market. That does not seem like a lot compared to Apple’s 70% market dominance, but SanDisk’s closest rival, Microsoft controls only 3% of the space, according to market research firm NPD Group.
As competitors are adding Wi-Fi and “shake to shuffle” technologies to their players, SanDisk is stripping those features away in order to press its price advantage. The Sansa Clip player, SanDisk’s answer to the iPod Shuffle, comes equipped with a display and 2GB of memory and retails for $59.99. By comparison, the display-less 2GB iPod Shuffle sells for $69.99. And SanDisk’s video-playing 8GB Nano competitor retails for $119, versus Apple’s $149.99. Indeed, SanDisk has succeeded by targeting consumers who cannot afford an iPod or a Zune.
“The key is that [SanDisk] very aggressively priced their players,” says Gartner analyst Jon Erensen. Best known for its flash memory products, SanDisk can get flash at a price no one else can, he adds.
IDC analyst Susan Kevorkian agrees. “We think SanDisk has been savvy about developing its player line because they realized it wasn’t enough to have access to low price flash.”
Kevorkian also notes that SanDisk’s partnerships with Best Buy and Internet music service Rhapsody–despite its modest subscriber base–have been “important distribution plays.” They helped SanDisk establish a brand and a retail presence, even though the company lacks the marketing budgets of Apple and Microsoft. Besides, she says, SanDisk has a strong brand name in the flash business that it has transferred to its portable music players.
And if SanDisk’s SlotMusic format takes off, the company already has a whole installed base of microSD-card-compatible players. Gartner’s Erensen says SanDisk is very good at pressing its technological advantage. And if retail-bound shoppers are already set on buying physical media for their digital music players, they might as well stick with SanDisk. Their slots may just get lucky.
