SanDisk 2006 Annual Report Download - page 5

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Excellent Prospects for Future Growth In 2006, all our key markets grew and we had outstanding
year-over-year revenue growth of 179% in mobile, 93% in digital audio and 55% in USB drives. We believe
that the mobile segment will continue to be the fastest growing market for SanDisk in 2007. We pioneered the
microSD
TM
card that has become the mobile industry de-facto card standard, and we currently sell products to all the
major handset manufacturers and have been expanding into the mobile retail market. Cell phones with new
applications are fueling growth for Flash storage and we believe digital music will drive user preference for higher
NAND capacities in portable digital audio players. We are also pleased with the growth in our Sansa»MP3 line of
products and we have emerged as an innovator in this category, with the launch of the industry’s first Wi-Fi»based
MP3 player and the introduction of our first video-enabled pocket-sized media player. USB drives continue to
experience good growth and we believe there are strong opportunities, particularly in the enterprise segment and in
geographies where our market share is currently low. Furthermore, new capabilities such as U3
TM
enabled smart
drives and Windows»ReadyBoost
TM
enabled USB drives should continue to expand the market in this business.
SanDisk’s sales of digital imaging cards has continued to grow with the growing penetration of high resolution
cameras, increasing attach rates of cards and SanDisk’s leading performance in speed and reliability. In early 2007,
we launched solid state drives for notebook computers that are designed to provide better user productivity with less
down time and failures, faster boot times and reduced latency for random searches as well as a longer battery life.
We believe demand for our products can continue to grow at a hefty rate in the next several years.
In conclusion, while 2006 was a very good year for SanDisk, 2007 is shaping up as quite a challenging year for
the industry and for SanDisk. Our focus in 2007 is to put all our energy on product innovation and leading edge
technology to drive down costs. We appreciate the continuing support and confidence of our customers, dedicated
employees, strategic partners, suppliers and stockholders.
Realizing the full potential of SanDisk is a multi-year endeavor requiring vision, passion, commitment, and the
long-term strategic investments that are necessary to fulfill the new opportunities. The digital revolution in
consumer electronics and communications has positioned Flash storage at center stage and Flash has rapidly
become more pervasive than any other memory technology. The growing importance of Flash storage is not
surprising and for us it represents a coming together of our vision of the past 19 years. I am proud of our
accomplishments and confident that together, with the continued support of all of our stakeholders, SanDisk’s
destiny is to make a major impact in our markets in the years ahead — our best is yet to come!
Eli Harari
Chairman and Chief Executive Officer