W YORK (Fortune) -- SanDisk CEO Eli Harari once plotted to dethrone the iPod with a series of "iDon't" ads ­ a marketing campaign that cast Apple iPod users as fad-driven sheep, and promoted his company's Sansa media players as the smart alternative.

Some fads, however, don't pass. And in his sunny Silicon Valley conference room one recent morning, the founder and CEO of SanDisk admits what many music lovers have known for a long time: the iPod wars are over, and Apple (AAPL, Fortune 500) won.

"You can't out-iPod the iPod," Harari now admits.

Even so, one could argue that SanDisk (SNDK) won something too. Its Sansa (which remains a distant No. 2 to the iPod) helped prove that SanDisk's core product, flash memory, is the best storage technology for mobile gadgets such as the Sansa and iPod. This in turn sparked demand for SanDisk's patents, bringing the company a healthy stream of licensing and royalty revenue.

Flash memory chips are tiny, low-power storage chips found in digital camera memory cards, iPods, iPhones, BlackBerrys and pocket-size computers.