Technology

SanDisk Borrows a Tune from Apple's Songbook


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Editor's Rating: star rating

The flash memory maker's Sansa is a strong competitor to the iPod, but it won't displace the digital music player's status as No. 1

Competing with the best in anything is a tall order, especially when that competitor is something of a cultural icon.

That's the spot that flash memory concern SanDisk (SNDK) finds itself in with its Sansa line of digital music players. The Apple (APPL) family of iPod and iTunes products has many competitors, most notably, Creative (CREAF) and iRiver. But SanDisk has one advantage the others lack: a captive supply of flash memory chips (see BusinessWeek.com, 5/8/06, "Will SanDisk Sour Apple's Tune?").

PLAYING CATCH-UP.

That's no small edge for SanDisk. Flash chips—they're technically known as NAND flash—store data even after the device they're in has been turned off. SanDisk makes its chips primarily for use in flash memory cards like those found in digital cameras, PDAs, and sometimes wireless phones. But MP3 players have also become big consumers of flash.

When Apple unveiled its first iPod in 2001, the device used a hard drive to store songs. That changed with the launch of the slender iPod Shuffle in 2005, followed by the iPod nano in late 2005. One of Apple's first moves, once it got serious about flash, was to lock up supply contracts with companies such as Samsung and Hynix Semiconductor. The result: Other companies selling flash-based music players suddenly found themselves waiting in line for the chips (see BusinessWeek.com, 9/22/05, "Unpeeling Apple's Nano").

But not SanDisk. Because it makes the precious chips, it's able to produce players that are competitive with Apple both on price and capacity. SanDisk is now the No. 2 maker of music players behind Apple, and market research firm NPD pegs its share of the business in the U.S. at just under 10%, well ahead of Creative, Samsung, Sony (SNE), Toshiba (TOSBF), and others.

FUN FEATURES.

I've been playing with SanDisk's latest Sansa e280 model for several days, and comparing it with the iPod nano. Until last week, the Sansa had one big advantage: a whopping 8 GB of memory. But Apple just matched SanDisk with 8 GB at the high end, and it sells that model at a comparable price of $249.

Capacity and price being equal, the Sansa still doesn't quite hold its own against the iPod. It lacks Apple's hallmark simplicity, for one thing. On navigating to a certain location in the music menu, I wanted to go back, but couldn't easily figure out how to do that. Eventually I realized that the power button at the lower left corner also doubles as a “menu” button, activating the home menu. Silly me. I had assumed that the button responsible for turning on the Sansa 280 would also turn it off.

As with other MP3 players, there are a handful of features integrated into the Sansa that aren't found on the iPod nano. There's an FM radio tuner (but no AM) and a function that allows you to record directly from the radio. It also has an integrated microphone, meaning the player can double as a digital voice recorder, handy for meetings and class lectures. You can duplicate these functions on the iPod nano, but you have to purchase accessories such as the $49 iPod Radio Remote or the iTalk microphone attachment from Griffin Technology.

The Sansa isn't limited to 8 GB of capacity. It has a slot for a Micro-SD memory card, which is a smaller variant of the SD memory cards used in digital cameras. About the size of the fingernail on my ring finger, this card is available from SanDisk at up to 2 GB, bringing the full capacity of the Sansa up to 10 GB, or 2 GB more than the iPod nano. (Note: The 2-GB Micro-SD card doesn't seem to be available at the moment. You'll have to settle for a 1-GB card, for about $65.)

GETTING REAL.

Unlike the nano, the Sansa also does video. But I have to say, video is not that interesting to watch on a screen that measures just 1.8 inches diagonally. This is slightly more display area than you get on the nano (1.5 inches), but the screen is oriented vertically, so you have to hold the device sideways to watch.

Still photographs work better. You can forget about carrying around pictures of your kids in your wallet. MP3 players hold far more images. For this particular task, the nano beats the Sansa. I couldn't figure how to run a photo slide show on SanDisk's device. The nano makes it easy, and the images looked sharper and brighter.

Finally, we come to the music. Nano wins hands down because of its connection to Apple's iTunes service, which is only available on iPods and on Motorola's (MOT) ROKR line of wireless phones. Coming versions of Sansas will be tied very closely to RealNetworks' (RNWK) Rhapsody music download service, thanks to a tie-in between SanDisk and Real. I've recently started using Rhapsody, and while I prefer iTunes, I have found a lot to like about its competitor. A tight integration with Sansa could offer some consumers a compelling alternative to the iPod/iTunes combination.

Hesseldahl is a reporter for Bloomberg BusinessWeek.

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