“SanDisk CEO Eli Harari profited from his physics education by inventing the use of memory chips to store digital photos on tiny, removable cards. The company now sells more than 100 million memory cards a year. It recently topped $2 billion in sales, including royalties from rivals licensed to make cards… SanDisk is now expanding beyond photography, with USB flash drives, cards for cellphones, digital music devices and video game systems. Harari held management jobs at Hughes Aircraft, Intel and Honeywell before founding SanDisk (originally named SunDisk) in 1988. He spoke to USA TODAY’s Jefferson Graham at SanDisk headquarters in Silicon Valley’s Sunnyvale, Calif.,” USA Today reports.
Graham: A year ago, SanDisk wasn’t even in the digital music business. Now, with your SanDisk Sansa digital music player, you’re No. 2 in market share behind Apple Computer and its red-hot iPod. How did you come so far, so fast?
Harari: …We had a significant advantage over competitors, because we could get flash memory at lower costs than (Apple CEO) Steve Jobs could. We felt if we could leverage our 150,000 retail locations that sell our memory cards to sell our MP3 players, too, we could really have something. And we were proven correct. We came out of nowhere, and zoomed past Sony, iRiver, Creative and all the rest.
Graham: Apple has 78% of the digital music player market; SanDisk has 10% of the “other” category. Apple has sold more than 42 million iPods. You’ve sold 1 million Sansas. How do you catch up?
Harari: This month, we’re introducing a new player, the Sansa e200, and it’s superb. We feel it’s far better designed than Apple’s Nano, which also uses flash memory instead of a hard drive to store the music. Our new Sansa is priced attractively and has many more features than the Nano. You can view pictures and videos on our unit. We have FM radio, voice recording, a slot to add extra memory from a card, and a removable battery. The Nano doesn’t have those…
Graham: Many analysts have said that Apple has ruled in digital music because of the seamlessness of the iPod and iTunes Music Store, where Apple fans buy digital music. SanDisk doesn’t have a music store. You work with multiple partners, such as Rhapsody, Napster and Microsoft, which provide the software. Are you hurt by not having a store?
Harari: Apple deserves a lot of credit and has done a superb job. But they have a closed, proprietary system. We work with, as you say, Rhapsody, Napster, Yahoo and many alternatives. That’s a plus. Apple hasn’t had a competing alternative that’s just as good. But that’s going to change. We are not going to be a 10% player. We will improve our position.
More in the full interview here.
Obviously, Apple’s solution is no more “closed” than Microsoft’s. In fact, it’s far less “closed.” Apple’s iTunes is clearly available to both Mac and Windows users, covering the vast majority of the market. In contrast, Microsoft requires that users of its DRM (Napster, etc.) run Windows and Windows only; Mac users need not apply. Apple’s solution supports supports tens of millions more users (who are – on the whole – richer and better educated, hence more likely to have disposable income to buy media content online) than Microsoft’s proprietary DRM. If anything is “closed,” Microsoft’s DRM and, by extension Napster and the other also-ran outifts that use Microsoft’s DRM, are the most closed. SanDisk’s Harari is being disingenuous to try selling SanDisk players with the “Apple’s closed, proprietary system” argument when his players rely on a patchwork of struggling online outfits that are all stuck with Microsoft’s even more closed, proprietary system.
To paraphrase what we wrote back on Feb. 28th: The line “includes an FM radio and tuner” is so-tired-it’s-dead. Consumers do not care. Just look at the numbers. It’s a feature without a market. If you really want FM radio on your iPod, get Apple’s iPod FM Radio Remote.
• Apple’s brand new iPod Hi-Fi speaker system. Home stereo. Reinvented. Available now for $349 with free shipping.
• Apple’s new Mac mini. Intel Core, up to 4 times faster. Starting at just $599. Free shipping.
• MacBook Pro. The first Mac notebook built upon Intel Core Duo with iLife ’06, Front Row and built-in iSight. Starting at $1999. Free shipping.
• iMac. Twice as amazing — Intel Core Duo, iLife ’06, Front Row media experience, Apple Remote, built-in iSight. Starting at $1299. Free shipping.
• iPod Radio Remote. Listen to FM radio on your iPod and control everything with a convenient wired remote. Just $49.
• iPod. 15,000 songs. 25,000 photos. 150 hours of video. The new iPod. 30GB and 60GB models start at just $299. Free shipping.
• Connect iPod to your television set with the iPod AV Cable. Just $19.
Apple’s vs. Microsoft’s music DRM: whose solution supports more users? – August 17, 2005
Joke of the Day: Red Herring headline: ‘Creative may be iPod threat’ – February 28, 2006