SNDK PM's
Monday, August 14, 2000 9:03 PM ET
To: Ausdauer
From: Andrew L. Burk
Ausdauer
I have been rereading sections of the revised GG starting at page 52, Proprietary Open Architecture With High Switching Costs. I think this is an area that needs focus--at least for me. I have yet to conclude that SNDK passes on either account, partially because I am still completing my due Diligence, and partially because things have yet to unfold.
SNDK obviously controls certain IPR related to flash memory and high density flash memory. It also has IPR related specifically to CF (eg the controller in the card) but this may be under challenge. If I understood correctly, SNDK also has IPR related to the PCMCIA combination with the CF card. If all of this IPR is successfully defended, and camera manufacturers adopt these attributes as defacto standards, it appears that SNDK passes the Proprietary Open Architecture test.
As for the High Switching Costs test, here again I think there are questions. How much pain will camera manufacturers go through if they decide to adopt a new memory solution. I suppose they will need to address camera and computer interfaces and customers' investment in CF--I'm not sure what else though. And I'm not sure these two factors make a solid case for the existence of high switching costs. Are there other switching costs that I'm not aware of that would come into play if CF was in fact the defacto standard?
You have discussed some, if not all of these items in pervious posts. I hope you consider them further in your oncoming GG post. I am very interested in your assessment.
Thanks for all your hard work.
Andy
Monday, August 14, 2000 10:02 PM ET
To: Andrew L. Burk (who wrote)
From: Ausdauer
Andy,
One additional factor that is presently bothersome (and wasn't a factor 16 months ago) is the concept of a large embedded flash cache with Bluetooth connectivity. I think that is still a few years away, but it could be problematic. It solves the issue of PC connectivity, but will require a substantial re-outfitting of the PC base that is presently installed. And even with Bluetooth I am still not certain that removable storage goes away.
Well, just one more thing to tuck away and worry about when the time comes.
Tom
Tuesday, August 15, 2000 6:11 PM ET
To: Andrew L. Burk (who wrote)
From: Mike Buckley
Andy,
I think you're right that it is an open proprietary structure and that SanDisk's ability to defend its IPR in that regard continues to be critically important as well as not yet thoroughly tested.
Regarding the high switching costs, I think there is another cost you didn't mention, one that is born by the end user. When the end user settles in on a particular type of removable memory, s/he wants to be able to continue buying handheld devices using the same form factor. Otherwise additional storage devices will have to be purchased. Device manufacturers are not going to want to switch back and forth to different form factors because it causes confusion in their marketing strategy and potential dissatisfaction with their existing customers.
Even so, I wouldn't consider those switching costs terribly high. That issue is probably the weaker attributes of SanDisk that we know exists today. I think the possibility of other innovations (whether it be bluetooth or completely discontinuous innovations) that potentially loom in the future is another weakness. My thinking is that we need to keep a close eye on those potential weaknesses, recognizing that they exist but appreciating that they might be more than compensated for by the size of the consumer-based market.
When we look at all these angles it makes me appreciate how STRONG Qualcomm, Gemstar and Siebel are (especially the first two) and how restrictive Gorilla Gaming really is.
Feel free to post this if you think it might be helpful.
--Mike Buckley
Again, I would like to invite others to comment.
Thanks
Andy |
