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Sun 28 Jan 2007 12:00 AM

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The next big thing

With its first Arabic-enabled MP3 player and line up of next-generation products, Edward Moro, head of SanDisk EMEA, reveals how he plans to transform the world of mobile consumer electronics.

Dominating first place in the world’s flash storage cards market, while also enjoying second place as the largest seller of MP3 players in the US, are not the only reasons why big players like Apple and Microsoft are keeping a watchful eye on SanDisk.

With the opening of its headquarters in Dubai and the much-anticipated first Arabic-enabled MP3 player to be released in less than two weeks time, in addition to a set of revolutionary new products launched at the Consumer Electronics Show (CES), SanDisk is threatening to change the face of the global and regional mobile entertainment industry forever.

“The Middle East has been a strong growth area for us for the past three years and we see that growth continuing over the next three to five years. Dubai was a fairly easy choice for us, as there are many international companies coming here,” explains Edward Moro, SanDisk’s vice president and managing director for the Europe, Middle East and Africa (EMEA) region. The new office, to be located in the Airport Free Zone, will cover the GCC, Levant, Greece, Turkey and Africa.

“What we are going to do is cater some of the content and usability of our products to the Middle East. You’ll see more and more of that being developed for the region specifically,” promises Moro.

This includes an Arabic-enabled Sansa MP3 player, which is currently being modified with an appropriate Arabic font after which a software with an Arabic interface will be available for free download from SanDisk’s website for all Sansa users.

At the Consumer Electronics Show (CES) in Las Vegas, the world’s largest electronics show, SanDisk announced several new products including a range of MP3 players, a USBTV, which is the first digital ‘flash DVD player’ to enable users to move digital content from PCs to television screens, and the State Solid Drive (SSD) that is tipped to replace hard drives in the future.

“What we’re really doing is looking at categories like mobiles, gaming, MP3, USB, and really expanding each of those categories. We want to offer more products than other companies do — it simply makes us more important to retailers,” explains Moro.

He adds that most of the company’s retail partners expect SanDisk to offer more products, which pushes the company to create a wider range of consumer electronics that can drive a considerable amount of business. That being said, it came as no surprise when two of SanDisk’s new gadgets, the USBTV and Sansa MP3 player, won best of show awards at the CES.

SanDisk, as a developer and now as a global leader, has already made a significant impact on the world of flash memory cards, used for storing a multitude of data including pictures and music. Aside from being sold as a standalone product, these cards are integrated into a variety of consumer electronics such as digital cameras, video games, MP3 players, phones and other portable media devices.

“One thing about our products is that they’re very generic especially with the flash memory card. People know what it is. You really don’t have to communicate other than in visuals,” Moro says.

However, with its flash memory cards everywhere, SanDisk seems more than ready to enter the fiercely competitive market of portable consumer electronics. SanDisk’s regional sales manager Tariq Husseini promises ‘more options’ with SanDisk products and ‘more value for money’. With SanDisk’s wide range of new products, introduced earlier this year at the CES, it would come as no surprise if consumers considered switching from iPods to more affordable alternatives like SanDisk’s Sansa MP3 player, which already has a 19% share of the market. The Sansa e200 MP3 player has an estimated starting price of US$140 for 2GB of memory space and US$250 for 8GB of space. Apple’s equivalents are priced at US$163 and US$270 respectively, and neither models play video.

“We are competing head to head with Apple and Microsoft,” confirms Husseini.

SanDisk has already entered the competition with groundbreaking creations like its SSD, or what Moro likes to call an “alternative to hard disks in notebook computers”. Moro explains the SSD might prove more practical particularly for business applications. He explains that the logic behind the 32GB drive lies in the ability to extend battery life, increase read-write speeds, decrease weight and make the product smaller if needed. From a reliability point of view, dropping a notebook computer will lead to losing information from the drive whereas with an SSD this problem is non-existent. An SSD is also less affected by humidity and temperature change. While initially aimed at enterprise users, Moro asserts this is only the first step towards a mass consumer adoption of the drive. Previously, such large capacity flash-based drives had been used primarily by the military, aerospace and telecom industries, which demanded high performance, efficiency and reliability under challenging environmental conditions.

Now, the declining cost of NAND (one of two flash technologies used in memory cards) flash memory has made SSD a viable and economically attractive alternative to existing technologies in a wider variety of applications, including mobile PCs aimed at enterprise and consumer users. “It’s going to be a large revenue driver for SanDisk,” says Moro. “You’ll start to see the first products being purchased and announced over the next six months but it will become mainstream by 2010.”

The drive has already been launched worldwide but will be the first to be sold to original equipment manufacturers (OEMs) that will integrate it into high-end notebooks, revealed Moro. He predicts that SSD will eventually find a market and sell as many as 35 million units.

“With that type of number there will always be other competitors, so it’s a matter of how much of the market we can take,” he admits.

Another competitive initiative is SanDisk’s USBTV, the first digital flash DVD player enabling users to view their PC content on their television screens or move that content onto televisions using a USB device. This product, announced at the CES, gained the support of several industry leaders and has been approved as a standard, and as Moro says, is the first step towards creating a large market. “You’re starting to see a lot of focus on the ability to take content and put it onto a TV because we know TV is really the hardware of choice for all consumers. Consumers really don’t want to watch TV on their PC; they’d rather watch their PC on their TV,” says Moro.

Before the idea of USBTV was initiated this was not possible. People who would rather view their computer content — movies for example — on television, had to go through the cumbersome process of burning a blank DVD, and then playing it back on a DVD player which would have to be attached to a TV.

This is why Moro believes the USBTV will make a big splash; especially as television continues to occupy a large slot in our daily entertainment schedules.

“Microsoft, in their keynote address at the CES, spoke extensively about in-home entertainments centred on TV, and this is really what we’re attempting to do,” Moro says.

With a USBTV player, consumers can directly plug into the USB port of virtually any personal computer, where it will act as a USB storage device for a quick ‘drag and drop’ of any desired file. The concept was demonstrated at the CES with a TV cradle and a remote control, allowing USBTV to connect to almost any TV set. The main innovative component incorporated into USBTV is a multimedia processor that converts stored files into a number of TV video and audio formats for direct playback on TVs without the need for any changes to the TV set.

The first pocket-sized players are expected to be out this spring and consumers will be able to pick and choose from content they’ve stored on the USBTV player and play it on their TVs. No wireless set-up or complex networking equipment will be required.

SanDisk also expects PC-to-TV convergence to enable new product possibilities for USB flash drive manufacturers and consumer electronics companies. While, in the beginning, USBTV players will be able to plug into the standard A/V sockets of most existing TV sets through an adapter cradle that connects to the player, the future might allow USBTV players to plug directly into new television sets through a built-in port.

“I think over the next two years you’ll see a lot of products come out, but we wanted to be the first in that. We want to help pioneer that,” says Moro.

The SSD and USBTV are only two of many other competitive products launched by the multinational corporation in its quest for market leadership in portable consumer electronics. Aside from its Arabic-enabled MP3 player, it has introduced Sansa View, a four-inch widescreen portable media player that promises DVD-quality display and allows users to play videos and store music and photos.

There is also Sansa Connect, a Wi-Fi enabled MP3 player that allows consumers to connect to music and online photographs through any open wireless “hot spot” internet connection. While Sansa Connect is scheduled for release across stores in the US by the end of March, Middle East consumers will unfortunately only find the product in regional stores three to four months later.

SanDisk promises the product will allow better access to music through subscription services, and streaming internet radio without the need for the consumer to have a PC.

Until recently, the company has heavily relied on its flash memory products to boost its revenues. With its new line of products this is set to change dramatically, especially with the emergence of more portable video players, which places SanDisk in the front line alongside many of the big players in the market.

Looking back, SanDisk has come a long way since 1988 when it was founded by Eli Harari. It became a publicly traded company on NASDAQ in 1995 and recorded revenues of US$1.8bn in 2004, which soared to US$2.3bn a year after.

Today, it has over 1300 employees and more than 185,000 retail storefronts worldwide, with headquarters in California, in the US. While 2006 revenues have not been disclosed yet, they are estimated to reach over US$3bn.

Currently, SanDisk’s focus is tilted towards the Middle East and GCC regions. With a new Dubai office and products targeting Arab consumers, company officials revealed they were next targeting Saudi Arabia. The business has gone as far as expanding its storefront network in the region from 2340 outlets in 2005, to the current figure of 6705.

“We want to expand our offices throughout the whole of the Middle East, Africa, Turkey and Greece. Our next offices will probably be in South Africa where we are growing quite dramatically. Then, obviously, Saudi Arabia,” says Moro.

With aggressive expansion plans and an exciting lineup of next-generation gadgets at competitive and affordable prices, it is safe to say that the likes of Apple and Microsoft need to brace themselves for the emergence of a mighty new player in the hardware game.

“We want to offer more products than other companies do — it simply makes us more important to the retailers”
“There will always be other competitors, so it’s a matter of how much of the market we can take”
“We know tv is the hardware of choice for all consumers. they really don’t want to watch tv on their pc; they’d rather watch their pc on their tv”

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