SanDisk Climbs the MP3 Food Chain

Everyone knows which company is the No. 1 seller of MP3 players. But do you know who's No. 2? It's not a major electronics company like Sony. And it's not a major computer company like Dell. It's SanDisk. How can an "unknown" company like that become a powerhouse in a consumer technology market?

Founded in 1988, SanDisk is the leading consumer brand of flash-based portable storage. It's the original inventor and world's largest supplier of flash storage cards. It's the only company in the world that has rights to manufacture and sell every flash-card format. Check out your digital camera or cellphone; it might have a SanDisk memory card in it.

How did SanDisk become a retail presence? Well, if you're a company that already makes the flash memory (the most costly part) for other companies' MP3 players, it's not a huge leap to add a decoder chip and an LCD screen. Consider, for example, SanDisk's latest MP3 player: the Sansa Connect (shown), a 4-gigabyte model with Wi-Fi that (unlike the Zune) lets you access or buy content from providers at any Wi-Fi hotspot. You can also access online photos, listen to Internet radio, and swap recommendations with other Connects anywhere on the Internet. Price? $250.

The moral of the story: If you're a big-name company, look at the little names printed on the chips inside your boxes. Those names may someday become your biggest competitors.

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