Businessmodel of SanDisk

Customer Segments

SanDisk has a segmented market business model, with customer groups having slightly different needs:

• Consumers - Individuals whose primary uses for storage include imaging, gaming, and audio/video.
• Businesses – Enterprises with large-scale needs whose sizes range from small businesses to advanced data centers.
• OEMs - Designers and manufacturers who create products for consumers and businesses. In 2015 sales from SanDisk’s top 10 direct customers and licensees accounted for 44% of its overall revenue. Apple alone accounted for 14%.

Value Proposition

SanDisk offers three primary value propositions: accessibility, performance, and brand/status.

The company makes its products available in a broad range of capacities, form factors, and performance levels. Its enterprise SSD solutions comprise all top storage interface protocols, including Serial ATA (SATA), Serial Attached SCSI (SAS), and Peripheral Component Interconnect Express (PCIe). Its client computing SSDs can be used in a standalone format (without a hard drive) or in a dual-drive configuration (with a hard drive) or in hybrid drives that contain the SSD and a hard drive. Client SSDs are available in custom and industry-standard form factors. These many options make SanDisk’s product lines accessible to a wider variety of customers.

The company has launched many innovations that have led to stronger performance in its products. For example, it introduced Multi-Level Cell (MLC) technology, which uses two bits of data per flash memory cell to double the “density” of memory chips. It also unveiled X3 NAND, which stores three bits per cell to provide 20% more memory chips-per-wafer. In general, SanDisks’ solutions have expanded flash memory capacity by 30,000 times while minimizing its cost by 50,000 times.

The company has a strong, well-established brand. It is trusted by customers due to its long history (over 25 years). Its products are found in many leading data centers worldwide and in hundreds of thousands of stores. It has also received recognition due to its performance and success. From 2012 to 2014, Thomson Reuters identified it as one of the “Top 100 Global Innovators”. In addition, IEEE Spectrum has stated that it has one of the most robust patent portfolios globally.

Channels

SanDisk has two main sales channels:

Commercial – Sales made directly and through distributors to system integrators, OEMs, and value-added resellers who embed, integrate, or bundle SanDisk’s storage solutions.

Retail – Sales made directly and through distributors to office superstores, consumer electronics chains, mobile phone stores, Internet retailers, mass merchants, mail-order and catalog companies, supermarkets, convenience stores, drug stores, and kiosks in numerous locations.

The company also promotes its products on its website, social media pages, at events such as conferences and summits, and through advertising.

Customer Relationships

SanDisk’s customer relationship is primarily of a self-service nature. Customers utilize its products while having limited interaction with employees.  The company’s website provides detailed answers to many frequently answered questions. That said, there is a community component in the form of an online forum and a personal assistance component in the form of phone, e-mail, and live chat support.

Key Activities

SanDisk’s business model entails designing and developing its storage solutions. Manufacturing is left to third-parties.

Key Partners

SanDisk works with a wide variety of partners to produce its products. Most of the company’s products consist of NAND flash memory combined with firmware and a controller. These parts are manufactured by third parties – flash memory supplies by Toshiba Corporation and controllers and firmware by third party foundries. The company’s other partners include mobile network operators, operating system vendors, system integrators, design firms, application developers, and chipset providers.

Key Resources

SanDisk’s main resource is its engineering team. Other important human resources include its sales/marketing and customer support staff. The company places a high priority on intellectual property – as of the end of 2015, it owned or had rights to over 3,550 U.S. patents and over 2,250 foreign patents. In addition, it had over 1,300 patent applications pending.

Cost Structure

SanDisk has a cost-driven structure, aiming to minimize expenses through low-price value propositions. Its biggest cost driver is research and development, a fixed expense. Other major drivers are in the areas of sales/marketing and administration, also fixed costs.

Revenue Streams

SanDisk has two revenue streams. It generates revenues through the sales of its products in the Commercial and Retail channels. It also obtains license and royalty revenue through its intellectual property.