SanDisk Buying Msystems: What it Portends For the Future
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We are seeing some serious consolidation in the hardware industry. Flash company SanDisk made one of the more recent moves when it acquired Msystems. What will this mean for the flash industry as a whole? Keep reading to find out.
The Acquisitions
The acquisitions this year in the equipment making and hardware industry have just kept coming: Alcatel chomped Lucent, Advanced Micro Devices acquired ATI Technologies, and Micron Technologies bought Lexar Media. Now On July 30, SanDisk Corporation of Milpitas, California (NASDAQ: SNDK), acquired Msystems (formerly known as M-Systems Flash Disk Pioneers) of Kfar Saba, Israel (NASDAQ: FLSH) in an all stock transaction. The Israeli's NASDAQ code (and former name) pretty much states what the merger is all about. It is a consolidation of two big companies, both of which are world class brands in the flash memory category. This acquisition will strengthen SanDisk's core competences.
The acquisition could lead to a whole new generation of products, as both companies seek to create new markets and expand their incursions into existing storage solutions for everything from PCs to handheld devices. To estimate the long term effects of this acquisition, we should look at the present and emerging products that both companies are currently involved in, and also the possible products that could materialize.
Positioning for an Unseen Tomorrow
Kevin Kelly's book, "New Rules for the New Economy," postulates that by 2010 , there will be ten billion handheld devices connected to the Internet. There is a definite upward trend in the use of cell phones, digital cameras, MP3 players, handheld video games such as the Sony PSP, Nintendo Game Boy, DS, iPod, and the use of handheld devices to view and hear podcasts. Relating it to SanDisk's presence in the Flash industry for final consumer products (MMC and Flash memory for handheld devices) and Msystems' strong customer base of original equipment manufacturers (OEMs), SanDisk looks like the fisherman who bought the lake, the boat, and the house with the jetty.
If the trend of storage systems moves toward flash memory, SanDisk and other flash storage manufacturers could very well be the computer barons of the next decade.
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