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

To: Binx Bolling who wrote (8555)	1/3/2000 3:32:00 PM
From: Ausdauer	Respond to of 60323

Binx, re: establishing a brand name Colorful CompactFlash Card from Pretec; More Colors Than Any Other Small Form Factor Card Today Thanks for posting the Pretec press releases. I find them a bit fluffy, but it was interesting to read about the transluscent packaging and the clear visibility of components within the CF cards. Four (4) 128MB CF cards, both transparent and translucent frames and panels with colors of yellow, blue, green and graphite are on display at CFA booth; the devices mounted on PCB inside the card, which consist of one controller IC from C-ONE technology and 256Mb flash ICs from Toshiba or Hitachi, can be clearly seen. As I posted previously, Pretec, Lexar, Viking, Simple Technology and a variety of other card assemblers are using components from various sources. When I e-mailed one of the companies earlier in 1998 I was told that they were aware of SanDisk, but they didn't use their flash chips. They also said that SanDisk wasn't entitled to any royalty payments because there are hidden royalties paid out to Toshiba and Hitachi for their flash chips which SanDisk already collects indirectly. This is why these companies (the card assemblers) are poorly positioned with respect to cost structure and why they will be particularly disadvantaged if card assembly patents are enforced. Thus, the importance of the Lexar patent infringement case is significant. This weekend I read several pieces in Red Herring on establishing a brand name, brand name recognition and the interplay of brand with advertising and marketing efforts. It appears that Pretec is following Apple's footsteps (and several other copy cats) by producing the neon/fluorescent/translucent/transparent coverings that have gained popularity. Clearly, Apple culture existed prior to the introdution of fruit flavored PC's, so the Pretec logic is not straight forward. In general, I am more inclined to the "black box" approach where the card's "gizzards" are hidden from site. That way I won't be too upset about paying good hard cash for a piece of translucent polyvinylchloride with only 3 chips inside. I think the plan could backfire for them. In fact, I would be more interested in seeing the exterior label modified for specially targeted consumer markets (digital photography, mp3, palm PC's...) and perhaps some creative packaging. Several months ago I mailed in several suggestions to the SanDisk marketing people. I have not heard back as to whether they would consider alternative formats. This marks the first time in history that any small form factor storage card can be brought so close to consumers and can be customized to personal styles and preferences. Brand name recognition is a very complex matter. Customer loyalty is quite important in this consumer market segment because repeat purchases will be garnered and because the notion of collectibility will be more realistic as prices come down over the next few years. Likewise, if there is a migration to MMC/SD Memory Cards it will be possible to capture a greater number of repeat buyers if the brand name is established. Most importantly, there needs to be a psychological attachment to the product for this to happen. Perhaps SanDisk's greatest selling points are the fact that it originated the CF standard, they have extensive intellectual properties, they have an impressive list of OEM's that they supply, and that management is highly focused on product quality & reliability. These features, if presented in a simple and clearly understood fashion, could greatly further brand recognition efforts. Some equate prototypic brand recognition/loyalty to the feeling of guilt attached to buying a PC with an Intel processor. It evokes both guilt and a sense that one is getting an inferior product. Customer loyalty follows accordingly. I think your post was suggesting that SanDisk pay attention to efforts others are making to set their brand ahead of the rest of the pack. I agree that this is an important facet of their business and that the appropriate administrative divisions should be working on a cost-effective campaign that highlights SanDisk's leadership in the removable memory market. Ausdauer SanDisk...See the Big Picture!