Art,
I am a little confused as to why an easing of the supply shortage for flash memory is a huge problem. From what Dr. Eli said at the annual meeting, the biggest problem for SNDK is not Sony or SmartMedia or Microdrives (the competing storage devices) but getting enough flash memory to supply its customers. The tight supply of flash memory was hindering further wide spread adoption of removable flash memory storage devices. For example, one problem the cell phone manufacturers have with incorporating MMC or other removable flash storage devices slots into their phones is their concern about the ability of SNDK and the sellers of the memory cards to procure enough flash memory. I recall he said his response to them is that SNDK welcomes the challenge. (Isn't that correct Aus, Jay?)
I also think high prices for flash cards are impediments to further purchases by consumers. I just bought the Canon digital elph, and the 8mg CF is so inadequate. But, I don't really want to spend $150 to get a larger CF card right now, so I am using the 32 mg card from my RCA Lyra MP3 player.
Now, I recognize that a decrease in the price of flash memory parts will mean a decrease in the average sale price (ASP) of SNDK products which may impact top line revenue. But it also will mean more units sold by SNDK as well as other CF manufacturers which also increases royalty payments. Further, it is not clear to me how margins will be impacted. Of course, a decrease in flash prices will impact the margins of the Joint Venture with Toshiba, but I am not certain that, in the aggregate, SNDK would not prefer an easing of the flash shortage.
Jason |
