SanDisk 2005 Annual Report Download - page 80

Download and view the complete annual report

Please find page 80 of the 2005 SanDisk annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 162

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162

Description of Our Business
Industry Background. The digital computing industry includes traditional computers and consumer elec-
tronic, communications and industrial products. We focus our products on digital consumer devices like digital
cameras, mobile phones, gaming devices, personal computers and portable digital audio players. The storage
requirements of these applications include small form factor size, portable and removable storage, high reliability
and storage capacity, low power consumption and the capability to withstand high levels of shock vibration and
temperature fluctuations.
The flash memory market is primarily comprised of NOR and NAND technologies. NOR is traditionally used
for code storage and characterized by fast read speeds with generally higher costs per megabyte and lower storage
capacities than NAND. NAND flash memory is traditionally used for embedded and removable data storage and is
characterized by fast write speeds, high capacity and lower manufacturing cost than NOR flash memory. We are
focused on NAND-based products.
Our Primary Markets. We currently focus primarily on five consumer electronics markets: imaging, mobile
phones, USB flash drives, gaming devices and digital audio players.
•Imaging. We make and sell flash storage cards that are used as the film for all major brands of digital
cameras. Our cards are also used to store video in solid-state digital camcorders and to store digital data in
many other devices including maps in global positioning systems, or GPS, and personal data in personal
digital assistants, or PDAs. Primary card formats for cameras and other digital devices include Compact-
Flash, or CF, Secure Digital, or SD, Memory Stick
TM
and xD-Picture Card
TM
.
•Mobile Phones. Multimedia features in mobile phones such as camera functionality, audio/MP3, games,
video or internet access have been increasing in popularity. These features require additional storage
capacity in the phone and transferability of data to and from other devices. Today, we are a leading supplier
of microSD, miniSD, SD, Memory Stick PRO Duo
TM
, and reduced sized MMC, or RS-MMC
TM
, cards for
removable storage in many mobile phone models.
•USB Flash Drives. USB flash drives allow consumers to store computer files on keychain-sized devices
and then quickly and easily transfer these files between laptops, desktops and other devices. We believe USB
flash drives will be a key factor in the evolution of mobile computing. In 2005, we announced products on the
U3 platform, which is designed to make the USB drive a platform for on-the-go computing.
•Gaming Devices. Portable game consoles now include advanced features and functionality, including
storage of game results, digital audio, video playback and photo viewing. These features demand high
capacity memory storage cards. In the first quarter of fiscal 2005, we began shipping brightly colored SD and
Memory Stick PRO Duo cards for this emerging market.
•Digital Audio Players. Digital audio players allow consumers to download, store and play music. In fiscal
2004, we introduced our first SanDisk digital audio player, utilizing flash memory for storage. Our current
line of digital audio players includes a number of products from the Sansa
TM
m200 series all the way up to the
flagship Sansa e200 series with both embedded and removable memory.
Our Sales Channels. Our products are delivered to end-users through approximately 150,000 worldwide
retail storefronts and as data storage cards bundled with host products by our OEM customers. We market our
products under the SanDisk brand in the retail channel using a direct sales organization, distributors and
manufacturers’ representatives. We also sell directly and through distributors, SanDisk branded and private label
products to OEM customers. Our sales efforts are organized as follows:
•Retail. We ship SanDisk brand name products directly to consumer electronics stores, office superstores,
photo retailers, mobile phone stores, mass merchants, catalog and mail order companies, internet and
e-commerce retailers, drug stores, supermarkets and convenience stores.
We also sell product to smaller retailers through distributors. Our retail distributors include AVS Tech-
nologies, Inc., D&H Distributing Co., Inc., Duttenhofer GMBH & Co., Hama Corporation, Inc., Holst
5
Annual Report