Paul Sr. and Thread,
Please take just a minute to listen to my final comments about the Lexar Media situation. These comments were made at the Shareholder's Meeting. Recall that the answers given in response to the questions presented here are not quotations. They are a digest of mental notes I took at the time. I was sitting next to Rex Dwyer when both of these questions were presented. In fact, I confronted Dr. Harari with both questions.
This is the link to the whole post...
Message 9518645
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Q) Will SanDisk be able to challenge competitors such as Lexar and SSTI with respect to issues regarding card write speeds. Is write speed a mission critical step for the consumer electronics market?
A) SanDisk is working on improving write speeds, but currently the real demand for such enhancements is in the professional photography arena with higher resolution cameras. It is not really noticeable with currently available digital cameras for the mass public. The company with the greatest write speeds really owns no more than "bragging rights" for the time being. This angle has been played to the extreme by competitors like Lexar essentially as a marketing ploy. SanDisk is working on creating their own controller and still uses controller chips from Motorola. Clearly, card function, compatibility, durability and reliability are key issues at SanDisk and it is apparent that these quality issues take precedence over pushing specs and risking a product recall.
Q) "SanDisk has a substantial retail presence currently. Can we expect any effort in the near future to develop the brand name? For example, will SanDisk employ any advertising targeted for the internet audience currently shopping at e-malls?"
A) (I asked this question and I kind of regret it now, but somebody had to do it! Eli seemed a bit steamed about it, so I know it is a sensitive issue.)
The reply was that this issue comes up frequently among the company officers at staff meetings. Advertising is expensive. It would take a serious bite out of profitability currently. Also, the digital camera market is still a nascent market. To their credit, SanDisk has been relying primarily on design-in wins and endorsements from OEM's, even though these endorsements may not be as evident on the consumer level as we as shareholders would like. There are also issues regarding respect for OEM's concerns about getting stuck with a shipment of private label cards due to overly competitive pricing or advertising by SanDisk. Thus, the whole issue about brand name promotion is intricately intertwined with other business issues. I personally believe that an OEM endorsement by Nikon or Kodak or Casio or RCA is PRICELESS. Sooner or later these associations will begin to pay dividends. In the mean time I believe that focusing on creating a highly reliable, quality product will have a profound effect down the road. Look at the problems with SmartMedia currently!!!
I think we are going to have to wait for a while before SanDisk will turn to print or internet advertising. As shareholders we should all be doing our best to publicize the SanDisk product line. Also, let's come up with some innovative ideas to help SanDisk out. I think Limtex or somebody else mentioned recycling the Intel publicity stunt by having OEM's include a red and white sticker that says "SanDisk Inside" on product boxes. You all have to have other ideas as well!
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It is for this reason that I believed the claims that Lexar Media made regarding the SanDisk's intentional promotion of bench testing results ("release-to-click" speeds) via an advertising campaign is difficult to believe. Strictly from a consumer's perspective, if you look at print advertising budgets and the leveraging of CF write speed claims the only reasonable conclusion is that Lexar Media that has tried to gain a competitive advantage over SanDisk.
But don't believe me. Just leaf through any digital photography periodical for the last year-and-a-half and the truth will be self-evident.
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