SanDisk Corporation (NASDAQ:SNDK) recently announced the launch of its wireless storage drives – the Connect Wireless Media Drive and Connect Wireless Flash Drive.  This not only diversifies its portfolio in the portable memory segment, but also addresses the issue of limited storage in smartphones and tablets such as iPhones, iPads and even the new Google Nexus 5 that have no expandable memory.
The wireless storage drives are beneficial for customers since it eliminates the need to overpay for premium storage options while buying mobile devices. It allows the user to carry large data file content such as high definition (HD) videos and movies on a separate drive without sacrificing the limited in-device storage. Since the wireless drives can be accessed by multiple devices at once, users are not compelled to buy separate memory cards for separate devices even if they have expandable memory on their smartphones or tablets. We have a $70 price estimate for the company, about 5% higher than the current market price. There could be a small upside to this estimate depending on how popular the wireless drives become and cannibalize the existing internal storage drives.
Connect Wireless Flash And Media Drives
SanDisk’s Connect Wireless Flash Drive is nearly the same size as a USB pen drive and therefore can be carried around anywhere, and comes with a replaceable micro SD card. On the other hand, the Connect Wireless Media Drive is half the size of a deck of cards and comes with an internal memory of 32GB or 64GB, together with a card slot to add additional memory just like in the Wireless Flash Drive. Both the drives are portable and give users the flexibility to access data from multiple devices (laptops, phones, tablets) at the same time. Data can be transferred via USB and can be accessed through a wireless network on both Android and iOS platforms.
The wireless drives allow users to share data among devices nearly instantly; for example, cameras store photos on micro SD cards that can be removed and inserted in the Connect Wireless drives and be shared with a group of people immediately after clicking photos or shooting videos. Since the device allows up to 8 devices to be simultaneously connected to the drive, it makes sharing data very convenient and inexpensive (if the internet charges are taken into consideration).
Through these drives, SanDisk is trying to tackle the ubiquitous problem of data scalability, especially in cases where mobile devices don’t support additional memory. Specifically, it could be good news for users of Apple devices such as the iPhone, the iPod Touch and the iPad, which do not have the option to expand internal memory. In addition, Google has introduced its Nexus 5 smartphone without a memory card slot – a design compromise that is likely to stay in future Google devices as well.  The lack of a memory slot in smartphones and tablets can lead to the internal memory being cluttered by a large number of photos, music, videos and other files stored by users. Although cloud storage offers an outlet for users to store additional data and access it from various locations, it requires an internet connection to access the data (for instance, it won’t be accessible when one is on a flight). This constraint of internet availability and the prohibitive costs of transferring large-data files over 3G/4G makes cloud storage a viable option only for long-term storage rather than frequently accessed data.
Competition From The Market
As of now, there are few players that offer wireless storage drives. Kingston Technology has a wireless memory card reader which is similar to the Connect Wireless Flash Drive but is about five times larger than the SanDisk Flash Drive, making it more difficult to carry around.  It also doesn’t come with a memory card. Kingston also has a competing product for SanDisk’s Connect Media Drive, Wi-Drive, but it is slightly larger than its SanDisk counterpart. Also, the Wi-Drive is available in fixed memory categories of 32GB or 64GB, and doesn’t offer the option of scaling up by inserting memory cards.
Seagate Technology (NASDAQ:STX) has wireless drives that belong to a different price segment than SanDisk’s with the capacity of the drives ranging from 500GB to 1 terabyte (TB). However, these drives do not have slots to read memory cards. So Seagate’s wireless drives at this point are not direct competition to SanDisk’s Connect Wireless Flash and Media Drives.
Impact Of Wireless Drives
SanDisk is targeting portability of storage at a reasonable price, offering more value for money than its competitors. The flash drives are concurrent with the latest technology. The pricing takes it ahead of the competition. In the larger scheme of things, the wireless storage drives should reduce the demand for premium storage options in smartphones and tablets. Where companies like Apple charge a premium of $100 for a 16/32GB increment in internal storage, SanDisk’s wireless drives that can be accessed by multiple devices are much more cost-effective for users.
Going forward, SanDisk could see an increase in its USB flash drive market share in addition to an increase in average selling price per GB. Since the removable memory card slots in the wireless drives use flash memory cards, the growing numbers of these wireless storage drives could complement SanDisk’s flash memory card business as well.
The popularity of wireless drives could reduce dependence on internal memory storage of devices. End-users often carry the same data on multiple devices. For instance, an individual would carry the same music on their iPod, phone, tablet or laptop. Carrying a wireless drive can prevent them from storing duplicate data across devices.
The Apple iPod Touch and the iPhone source flash memory from various storage suppliers such as Toshiba, SanDisk, Samsung and Hynix.    Google sources internal storage flash drives from Kingston and SanDisk. The number of GBs sold via this channel could also be affected if Google decides to scale back expandable memory going forward. SanDisk’s wireless drives could cannibalize the sales of internal flash storage drives across the market.Notes: