Sandisk becomes No. 2 MP3 player maker in U.S.

Flash memory card company SanDisk has quietly become the No. 2 seller of digital music players in America. “We want to be a strong No. 2 in the MP3 space,” said Eric Bone, SanDisk’s director of consumer product marketing. “There are people who, no matter what, will buy an iPod. All I want is for people to think there is an alternative.”

SanDisk, which began selling MP3 players in November 2004, used its strong presence at retailers across the U.S. to sell one million players during the recent holiday quarter. The company also reported a record $2.3 billion in revenues for 2005. “We already have the channels. We have the brand,” SanDisk Chief Executive Eli Harari said. “We are not Apple. We are not an iPod. But we have a highly respected brand.”

Through key patent holdings and a partnership with Toshiba, SanDisk gets its own source of flash chips at wholesale prices, allowing the company to sells its players at lower prices than other companies. SanDisk’s strategy is to sell MP3 players to those “beyond the middle class,” Harari said. “Our passion is to bring the cost of these devices down. It’s basically about creating new markets in which people can afford a product.”

The company’s current line of players range in price from $79 to $149 with capacities from 256MB to 2GB. SanDisk will release its new Sansa line next week, which consists of 2GB, 4GB and 6GB players and prices from $120 to $300. The high end model, the Sansa e200, will feature an iPod nano-like design, 1.8” TFT color screen, video and image playback, and a replaceable lithium ion battery. The player also supports Rhapsody, Napster and Yahoo Music.

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