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Technology Stocks : WDC/Sandisk Corporation

WDC 163.61

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To: Ron C who wrote (10016)	4/2/2000 10:12:00 AM
From: Ausdauer	Read Replies (1) of 60323

Ron, I think you hit the nail on the head. Lexar is going to benefit from licensing fees from Sony for the controller technology. I expect that the license to manufacture a Lexar branded Memory Stick is free. I mean, how will they promote the Memory Stick in the current environment if card assemblers are required to pay a fee for manufacturing??? It would be a different story is Memory Stick were a defacto standard, but it isn't. Also, Sony desperately needs a second source in order to credibly price the Memory Stick and to bring innovation and functionality to their product. The lack of a second source can potentially retard product development. I think this is the beauty of the open standard for CF and MMC. This is especially true because they (Sony) has decided to put forward this new (competing) standard. I read this weekend that Toshiba manufactures the CPU for Playstation 2 and I would not doubt that Toshiba flash chips are in Memory Stick. This could spell additional revenues for the Toshiba/SanDisk JV down the road. Sony made the mistake of promoting the Memory Stick as "chewing gum". Now if some little kid swallows this tasty piece of plastic (with the appealing purple color) they are facing product liability claims. Perhaps this is why it is not being used in Playstation 2. Now they have to develop two separate memory card products. Sony, with its clout and established name brand, appears to have picked an unlikely bed fellow in Lexar. With the Playstation 2 memory card recall I will be so bold to say that they appear to be in a real pickle. Nothing that a little cold hard cash won't cure. I am sure Eli and Crew would happily consult for a fee, although I would feel a bit jilted that they passed up SanDisk, the industry leader, for the likes of Lexar Media. With the advertising budget Sony has flaunted thus far for the Memory Stick it would seem justifiable to command a higher consulting fee should SanDisk's services be required. Ausdauer

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