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

To: Hiram Walker who wrote (6386)	7/16/1999 8:44:00 AM
From: Ausdauer	Read Replies (1) \| Respond to of 60323

Hiram, We would be interested to hear your take on S3 and its presence in the mp3 market. To switch the topic slightly... I listened to the SSTI conference call this week. People are making a distinction between "code storage" and "file storage". The code storage applications use older technology (512 Kbit to 4 Mbit) for embedding things like PC Bios (PS Bioses?) and other software applications into computing stations, set top boxes, video games, telecommunications devices,... SanDisk is not into that market at all. However, SSTI is entering the CompactFlash market (aka "file storage") with their own branded CF product utilizing their "SuperFlash" thick oxide proprietary technology and its own brand of microcontrollers. I believe they have foundry partners through some cross-licensing arrangement. When asked about their plans to enter the CF market the SSTI CEO cautioned that the costs for dedicating fabrication, testing product, pilot production and ramp-up are enormous, especially because the continued success depends on moving the final product at the retail level. That is to say, the technology may be obsolete (obsolete = too costly for intermediate-term production) even before it hits the shelves. In other words, if you commit, then you have to be able to move product to absorb production costs. Profitability only comes with high volume sales. And if you cannot pay for the previous generation of products you cannot pay for the next generation. I hate to restate the obvious, but I believe better brand name recognition by consumers and ongoing retail outlet contracts (like the Sears, RadioShack and Target announcements) will be an essential ingredient to long-term success. The reason this is key is because SNDK has an ever increasing retail channel that will move inventory before it gets "stale". Also, the importance of "turns business" and card bundling cannot be underestimated. The lack of such buffers represents a substantial barrier to entry for smaller producers. SanDisk's execution in this regard has been inspiring. Also, SanDisk has focused primarily on continually improving the cost, capacity, compatibility and reliability of their flash storage products and less on side issues like write speed. Eli basically said that "speed kills". Not his exact words, actually, just my interpretation of what can happen if your priorities begin to focus on less important marketing features and away from quality control. I would be happy to hear from any semiconductor production engineers in the audience on this matter. Ausdauer