SanDisk envisions new format as successor to the CD

Benny Evangelista, Chronicle Staff Writer

Wednesday, September 28, 2005

SanDisk Corp., the Sunnyvale maker of flash-memory cards used to store photos and other digital files, on Tuesday introduced a new line of cards the company hopes will become the next-generation successor to records, cassette tapes, CDs and DVDs.

SanDisk also announced its first big client -- the Rolling Stones, who plan to release a version of the album ``A Bigger Band`` prerecorded on the thumbnail-sized Gruvi brand microSD card. The miniature cards can be played on devices like cell phones, computers and portable media players.

The $39.95 Rolling Stones card, due out in November, will include extra songs from the band`s catalog that can be accessed for an extra fee.

All of the songs stored on the card will be protected from unlicensed copying using new SanDisk technology called TrustedFlash, which the company believes will help it gain the trust of pirate-wary record labels and movie studios.

``TrustedFlash cards will unlock a world of premium content to consumers using mobile phones, music players, game players and video players,`` SanDisk Chief Executive Officer Eli Harari said in a news release.

The company introduced the Gruvi cards during the Cellular Telecommunications & Internet Association convention at the Moscone Center. SanDisk also said that TrustedFlash technology will be supported by Samsung mobile phones and Yahoo`s online music service.

Analyst Richard Doherty, research director for the Envisioneering Group of Seaford, N.Y., said there are a growing number of devices that already use flash-memory cards. So introducing a new format won`t require wide distribution of new hardware, he said, a factor that led to the failure of other proposed successors to the CD or DVD.

At the same time, record labels and Hollywood movie studios are keen to find new ways to release content without the risk of piracy, Doherty said. The fact that the Rolling Stones will sell a Gruvi album is significant because they are distributed by one of the world`s biggest labels, EMI Music.

``We see this announcement as only the tip of the iceberg in terms of the number of studios and labels who say, `Oh, I can work with this,` `` Doherty said.

The Gruvi cards come in miniSD, microSD and SD formats, with up to 2 GB of memory.

``In the future, this media platform can be used to download movie content online,`` said Harry Wang, research analyst with Parks Associates of Dallas.

However, Wang said, he is skeptical that music fans will buy an expensive flash card loaded with more content than a CD when they have shown they ``only want two or three songs they like that they can download off iTunes.``

Sandisk shares dropped 89 cents to close at $44.32 in moderate Nasdaq trading.