SanDisk Facing a Rough Road on Hard Drives

SAN FRANCISCO -- SanDisk's(SNDK Quote) dream of seeing flash memory take root in the PC looks better than ever.

Now comes the hard part.

A slew of recent announcements suggest the idea of solid state drives -- PC hard drives consisting of flash memory chips rather than rotating magnetic discs -- is starting to catch on. But these promising developments for flash technology also point to the challenges facing SanDisk.

As SanDisk rides flash memory into the computing world, it will be competing on unfamiliar turf, where an entrenched group of players have long held sway. Breaking that barrier, with a mix of technology and aggressive dealmaking, will determine SanDisk's fortunes in what could soon count among the most significant markets for flash memory.

"They're [SanDisk] trying early on to position themselves well, but it's true that they will have more of an uphill battle" in the PC market, says Lazard Capital Markets analyst Daniel Amir.

SanDisk shares, which closed Friday at $51.29, are up about 30% since March as Wall Street sees hope that prices for flash memory have stabilized, following sharp declines earlier this year. The adoption of flash in PCs, which SanDisk has promised will become a growth driver next year, is also whetting investors' appetites.