SanDisk Facing a Rough Road on Hard Drives

Although SanDisk is a newcomer to the PC world, the company's track record of forging strong partnerships in the retail space and its technology should serve it well.

Lazard Capital's Amir believes SanDisk's portfolio of products and intellectual property will help it get a foothold in the PC business.

Among the most important of these technology assets is the controller chip that operates alongside the flash memory, particularly a controller that works with a flavor of flash known as MLC.

According to a recent note by American Technology Research analyst Doug Freedman, SanDisk has developed an MLC controller designed for flash hard drives used in low-end notebooks sold in developing nations. And Freedman writes that an MLC controller for mainstream flash hard drives is not far behind.

SanDisk also has its own supply of flash memory, through a joint-venture with Toshiba. In the volatile world of flash memory, where sharp swings in prices and supply are the norm, having a guaranteed source of flash can make all the difference (as the troubled tale of Lexar Media shows).

That could give SanDisk an edge, as it seeks to fend off competitors like Seagate, a maker of magnetic hard drives, which recently announced plans to roll out flash-based hard drives in 2008.

For its part, Seagate contends its relationships with the world's PC makers, and its experience and expertise designing storage products, will help it move into solid state drives. Whether a hard drive is magnetic or flash-based, Seagate says the real key is in the system design and in optimizing the firmware that controls the communication between the storage drive the PC.

"That's where the critical value add is; it's not necessarily in how to stack the flash chips," says Seagate spokesman Woody Monroy.

As SanDisk seeks a place on the PC stage, the tricks it does besides stacking chips will be the main event.

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