"Every memory product has become a commodity item, and certainly one aimed squarely
at consumers will become a commodity, if it hasn't already. Nobody cares what brand of memory
is in their PC, and nobody cares what brand of Flash is in their MP3 player. As long as
capacity is constrained pricing pressures may be mitigated...but you can bet
your bottom dollar capacity won't stay constrained if there is any margin in this business."
I agree and disagree, W-L-D.
Once price becomes the only differentiating factor at the consumer
level we have indeed become a commodity item. As you have stated
pricing and not branding appear to be more important. The difference
for SanDisk is that it does profit on both ends of the flash market.
First, the big players (and partners) like Toshiba, Samsung, Sharp
and Hitachi are all licensing core patents for flash manufacture.
These patents are used to create the building blocks of flash cards.
[Other interests may include licensing of SanDisk's MLC technology
and perhaps controllers (needed for SDMC/MMC, for example) used in
MLC-based products. I don't know this for a fact, but it would follow
that '987 must extend to include MMC and SDMC given both are flash
cards that use an integrated controller like the CompactFlash paradigm.]
The other area where SanDisk stands to profit is from the licensing
of '987 to other card assemblers. Lexar's admission of infringement
is key in this instance. The only potential pothole is that the
Lexar redesign, if successful and viable, could attract licensees
away from SanDisk, although I have some doubts this will be the case.
They way I have interpreted the situation is that SanDisk will profit
both from the raw materials and from the finished product because the
patent portfolio covers both facets of the flash market.
Thus, commoditization of flash cards will not be all bad for SNDK.
In fact, it may just be exactly what we need.
Ausdauer@commoditization_is_a_double-edged_sword.com |
