rll and Thread,
We almost hit $14 today. I am thankful for that. I also believe I discovered the reason for the recent price escalation...
IBD had two separate articles on digital cameras on Thursday, December 3, 1998. The first story (cover page) described the growing market for digital cameras. They mention the graduation from VGA and XGA resolution to megapixel resolution. Also, Kodak, Olympus and Fuji Photo are singled out as leading vendors. The utility of digital photography in web publishing, real estate and the insurance industries was mentioned. Additionally, other interesting uses such as a hospital web page where out-of-town family members can access digital photos of the latest family additions. The consumer market for digital cameras remains huge and largely untapped. They conclude by stating that only 43% of families use a PC at home and this fact will limit consumer market penetration until inexpensive photoquality printers are available which eliminate a PC interface altogether. (I disagree with that statement.)
The second article was a feature article in the "Computer and Technology" section that outlined the battle between CompactFlash and Smart Media for the removable memory market as it relates to digital photography. There are pie diagrams which emphasize SanDisk's dominance of the flash memory card arena. There is also a photograph of a person loading a 96 MB SanDisk CF card into a higher end Canon camera. Nearby a second photo with a SmartMedia card and an Olympus D-340L and the Fuji MX-700. The body of the article outlines the demise of Intel's product and Sony and Iomega's late entry into the fray. The IBM microdrive is also mentioned and the high entry price is felt to be a negative.
No mention of hand held computing is made.
There is a reference to the fact that the CF design is "licensed" by other card manufacturers from SanDisk, which is true in that products can be certified CFA compliant. There is no mention of monetary payment of licensing fees in particular.
Only a fleeting reference to Lexar and SSTI is made.
I think the article reflected positively on the market segment and SanDisk in particular. Also, the capitalization of Toshiba and Samsung (who co-produce SmartMedia) is contrasted with SanDisk's small size. It seemed to me as if they were implying a possible takeover situation in the future. (That may mean we will need brokerage accounts in Korea or Japan to sell our positions.)
Of note, I have been thinking lately about royalty payments to SNDK to date. IMHO, the current licensing fees paid are from Samsung and Toshiba likely in observation of an infringement of SanDisk patents by SmartMedia. Could this be true??? It seems quite logical. Equally logical, therefore, would be the future payment of royalties by all copy-cat CF manufacturers. That is, unless, Lexar possesses patents that exceed the combined portfolios held by Intel, Samsung and Toshiba.
Not very likely, is it?
In true IBD fashion I believe there will be a follow-up article or spotlight spread on SanDisk with an interview with Eli. Count on it.
Good luck to all SNDK longs.
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