SanDisk Launches Preloaded 'slotMusic' Cards

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The cards will be sold by retailers including Wal-Mart (WMT) and Best Buy (BBY). The music will be encoded in high-quality MP3 format and will not be subject to so-called digital rights management, which limits where and how often a song can be played. Each card will have a capacity of 1GB, more than enough to store an entire album, with extra space left over. The space might be used by the labels or the artists for videos, interviews, album art, extra tracks, or other premium content.

The songs themselves will be universally playable on any phone, computer, or digital music player that supports MP3, including the iPod and iPhone. And while Apple's devices don't include memory card slots, several music players, including SanDisk's own Sansa line and devices from Samsung, iRiver, and others, do.

Impact on the Takeover Bid?

SanDisk on Sept. 16 rejected an unsolicited $5.85 billion takeover offer from Samsung (BusinessWeek.com, 9/17/08). Now there's speculation Toshiba (TOSBF) or hard-drive manufacturer Seagate (STX) will make competing offers (BusinessWeek.com, 9/16/08).

As well-known consumer electronics brands, Samsung and Toshiba both might have the ability to throw more marketing muscle behind the slotMusic effort than SanDisk. But analyst Nam Kim of market research firm iSuppli says the new music distribution effort is unlikely to have any bearing on Samsung's bid. "Samsung wants SanDisk's retail distribution business in the U.S. and it wants to save money on the patent royalties it pays to SanDisk now," he says. Even if the slotMusic effort helps SanDisk get its long-hoped-for toehold in digital music, it may do little to help SanDisk stay independent.

Hesseldahl is a reporter for BusinessWeek.com.