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Technology Stocks : WDC/Sandisk Corporation -- Ignore unavailable to you. Want to Upgrade?

To: Craig Freeman who wrote (6189)	6/29/1999 9:12:00 AM
From: Ausdauer	Respond to of 60323

Craig, Ausdauer, I agree with you completely. Intel has made a fortune moving from 100MHz to 550MHz in tiny steps. With each product introduction they have charged a premium price for their latest "hot" product while dropping the price of its predecessor and selling huge volumes. It's a great strategy for maximizing revenue while keeping inventory from getting stale. SanDisk is in a slightly different position. Intel kept nudging the CPU standard up and up and up. Then at some point users become tired of their outdated PC and updates to a new system. There are some limits to how frequently a user updates something as expensive as a PC. I purchased a Pentium 200mHz MMX system 2 1/2 years ago for $2,300.00 and I am still quite happy with it. Thus, subsequent generations of CPU's have attracted proportionally fewer new or renewed users. SanDisk appears to be gauging product releases in step with gains in technology of the digital camera realm. They could really flex their muscles by producing a 256 megabit card with all the bells and whistles at a price nobody could afford, but what purpose would this serve? Rather than unloading the "Cadillac" on the consumer they are concentrating on less sexy, lower megabyte products at the bottom end and capable, reasonably priced cards with moderate capacity on the top end. The key is not maximum capacity, but a reliable product with sufficient capacity and a competitive target price. SanDisk has been able to control inventories in this manner, while at the same time tailoring product release with product demand. The fabless production and outsourcing of assembly will contribute greatly to the bottom line once production ramps up. Also, the fear of reprisal for patent violations is not an issue for them. Thus, all they need to concentrate on is quality, availability, price, name brand recognition and penetration of end-user devices into the mainstream. I also believe that the Intel analogy is accurate, but not quite identical to the model SanDisk has created. Also recall that SanDisk is selling directly to the end-user rather than relying on Dell or Gateway as a retail outlet. I currently own 4 CompactFlash cards and plan to add newer cards to my collection as my needs change and as newer devices come to market. Ausdauer