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Industrys Benchmark in Retail Channel Dynamics

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Industrys Benchmark in Retail Channel Dynamics Powered By Docstoc
					                      Retail Channel Dynamics of
                       Flash Memory Products

                             PriceG2, Inc.
                           Andy Higginbotham


Santa Clara, CA USA
August 2009                                    www.PriceG2.com   1
                      Agenda


         Introduction
         Channel Pricing: Mechanics, Erosion, Premiums
         High Capacity Introductions
         SSDs in Retail
         $/GB Charts
         Conclusion



Santa Clara, CA USA
August 2009                                   www.PriceG2.com   2
                      Introduction


 PriceG2, Inc. is a technology leveraged market research firm
       • Products: Research Reports, Analysis Software


 Product Categories
       • Flash Memory
             – SSD, USB Flash Drives, Secure Digital, Memory Stick, CompactFlash,
               MMC, xD
       • Hard Drives
             – 1.0”/1.8”/2.5”/3.5”, Internal/External, SATA/PATA/SAS/FC, RPM, etc.
       • (more to follow)


Santa Clara, CA USA
August 2009                                                            www.PriceG2.com   3
                       Data Transformed into Information

        PriceG2 tracks retailers products over the internet
                 Standard metric: s/w runs the same way every week
        Thousands of data points transformed into reports & s/w
Retailers
Best Buy
  CDW
Circuit City1                                                                                  Reports
                       Internet
CompUSA
                                01001000
   Frys                         01000101
                                01001100                                             Information
Office Depot                    01001100
                                01001111
 OfficeMax

  Staples
                                                 “Technology”                                  Analysis
                                                                                               Software
  Target

 Walmart

 Santa Clara, CA USA
 August 2009                  note 1) before Circuit City ownership change in 2009      www.PriceG2.com   4
                      Channel Pricing Mechanics

      Retail Price$ is fn(cost, GM requirements, retailer goals, etc.)


          GM$     COGS   Retail Price   Cost from Supplier
                                                                        “On-Line” Retailer
   $100                                                              •Small or no inventory
                                                                     •No retail buildings
    $90
                         Price                                       •No store employees
    $80                                                              =Smaller GM needed
                         GM
    $70
                                                                    “Bricks and Mortar” Retailer
                         Cost
    $60
                                                                      •Physical Inventory
    $50                                                               •Retail Buildings
    $40
                                                                      •Store Employees
                                                             time     =Larger GM needed

Santa Clara, CA USA
August 2009                                                                       www.PriceG2.com   5
                       Retail Pricing of USB Flash Drives
     Trends
      Price $ Erosion followed by Price % Erosion
      Technological maturity + multiple sources of supply (competition) =
       pricing falls towards an asymptote
                                    USB Thumbdrives, Lowest Weekly Retail Price Found
                                     USB Flash Drives,
            $180
                               CY2007                               CY2008                    1H2009
            $160


            $140

                      8GB
            $120
                            Price $ Erosion ~$100 (-60%)
            $100


             $80


             $60
                                                                 Price % Erosion ~ -76%
             $40      4GB

             $20


              $0


Santa Clara, CA USA
August 2009                                                                               www.PriceG2.com   6
                           Pricing Premium: “A Rose By Any Other Name”

                                     “4GB memory card = 4GB memory card,
                                      right? Why should pricing be different?”

                                   4GB Weekly Flash Card Pricing, CY2008
                  $60.00

                                                            SD         MS    CF
                  $50.00



                  $40.00



                  $30.00



                  $20.00



                  $10.00



                   $0.00
                              Q1             Q2                  Q3         Q4


                    SD had lowest average pricing over 52 weeks
Santa Clara, CA    
                  USA CF, MS were priced 1.4X, 3.1X AVG. higher, respectively
August 2009                                                                      www.PriceG2.com   7
                      Velocity of High Capacity Introductions

 How fast is the industry increasing capacity, really?

    Volumetric Storage: fixed mm3 = demand on technology to increase capacity
      • Flash Cards – must fit a slot bounded by x-y-z coordinates
                                                                         y mm

                                                            x mm       Flash Card

                                                                                     z mm


    Retail Price Limited Storage
       Price $, not volume (mm3) is #1 constraint
                                                       It costs what
       • USB Flash Drives
                                                            ???
       • SSD – “sort of”
       = Demand on technology to reduce $


 Underlying advances of flash memory cell density
Santa Clara, CA USA
August 2009                                                        www.PriceG2.com   8
                       Detection of New High Capacities

 PriceG2 software monitors weekly product listings at major retailers
      •   Description, Price, Model #, Availability* (number of days wait to ship)
 Alarms go off when a new capacity model appears, clients notified




 Santa Clara, CA USA
 August 2009                  *Note: not all retailers list availability             www.PriceG2.com   9
                        New High Capacities in CY2007 - 2009

 “Volumetric” Flash Card GB Increases
    • 2007 – 2008: Doubling
       – CF : 16 to 32GB in 11 months     64
                                                    Highest Capacity Flash Cards Available (GB)
                                                                                 SD    MS     CF
       – SD : 16 to 32GB in 8 months
                                               CF: doubled inSD: doubled in
                                                11 months
    • 2008 – 1H2009: Flat!                                     8 months
       – SD: 12 months, no increase yet
                                          32

       – CF: 16 months, “ “
       – MS: 16 months, “ “               16


                                           8




                                                    CY2007              CY2008           1H2009




  Santa Clara, CA USA
  August 2009                                                               www.PriceG2.com   10
                      Retail SSDs: What is out there?
 Week 27, 2009




                                                            27 Suppliers


                                                                         FUSION-IO
                                                              TEXAS
                                                                MEM      320/640GB
                                                    OCZ                   $14,479/
                                         KINGSTON                450GB
                              KINGSTON                250GB       $15,704    $9849
                      CRUCIAL 64GB          128GB
                                                        $659.99
        OCZ             32GB
                                             $239.99
                                  $139.99
           16GB          $79.99
            $44.99


Santa Clara, CA USA
August 2009                                                            www.PriceG2.com   11
                  27 SSD Suppliers: Where are They Found?

 “Center of Gravity” - technical retailers CDW, CompUSA, Frys
 Surprises: Best Buy (more?), Walmart (early adopter)
                                                                                  Week 27, 2009
                            # of SSD Suppliers Listed at each Retailer
       20

       18                             18
       16

       14

       12

       10                                       11
        8

        6

        4                    5
                                                          3
        2
            1       1                                              2
        0                                                                     1             0
       Best Buy    Office    Frys     CDW    CompUSA   Walmart   Staples   OfficeMax      Target
                   Depot


                                                                               www.PriceG2.com
                    Retail SSD Distribution Map, WK27
                  Legend: Low GB - High GB

  Supplier/Retailer Best Buy      CDW CompUSA Frys       Office Depot OfficeMax   Staples     Target    Walmart
      ACTIVE MEDIA                         16
          ALURATEK               32-64
             CAVALRY                     64-128            •Empty Cells  Opportunity
               CENTON                    32-192
             CORSAIR                     64-256            •15 of 27 suppliers with 128GB+
              CRUCIAL
           FUSION-IO
                                 32-64
                                 80-640
                                         32-64    64
                                                           • 7 of 27 suppliers with 250GB+
                     HP          32-64
                    IBM        15.8-31.4
              IMATION            16-128                                32-128      16-64
                  INTEL          4-160   32-160   80
               ITRONIX           32-64
          KINGSTON               32-160    80   64-160
              LENOVO            128-256
                 LEXAR             4-8           8-16        16
                    OCZ                  16-250                                                            30
         PANASONIC                 32
              PATRIOT                    32-256 32-256
                    PNY 64-128
                RIDATA                                                                                   16-128
           SAMSUNG                 256
             SANDISK               8-32
                    SUN          18-100
         TEXAS MEM                 450
      TOTAL MICRO                  32
        TRANSCEND              .128-192   2-64                                     8-192                  8-128
                WINTEC                   24-48
             CA
Santa Clara, 27 USA
August 2009                                                                                 www.PriceG2.com 3 13
       # of Suppliers      1       18      11      5          1          1          2            0
                                         $/GB Charts for Week 26, 2009
         $1.25/GB is the low found in 16GB USB Flash Drives
                         1 year ago price was $3.75/GB for 16GB USB Flash Drives


                                                                                                                          $8.50

                  $7.50                                                                         $9.00
$8.00

                                                                                                $8.00
$7.00
                                                                                                                      $6.50           $6.23
                                                                                                $7.00
$6.00
                               $5.00
                                                                                                $6.00
$5.00
                                                                                                                                                   $4.37       $4.56
                                                                                                $5.00
$4.00                                                                                                                             $3.99
                                            $3.12
                                                                 $3.49                           $4.00        $3.48
$3.00
                                                         $2.34                   $2.66
              $1.87                                                    $1.95                     $3.00                                                      $2.50
 $2.00                                                                                                                        $2.50                                      $2.50
                                                    $1.87                                                                                      $1.87
                          $1.25        $1.50
                                                                                                 $2.00                                    $2.00                     $2.34
 $1.00
                                                                                                                                                       $1.75
                                                                                                 $1.00
 $0.00
                                                                                          SSD                                                                                              MS
              8                                                                                  $0.00
                          16                                                             USB                                                                                          CF
                                       32
                                                    64                                                        2
                                                                 128                                                          4                                                  SD
                                                                               256                                                        8
                                                                                                                                                       16
                                                                                                                                                                    32

        USB           SSD
                                                                                                         SD       CF          MS

  Santa Clara, CA USA
  August 2009                                                                                                                                               www.PriceG2.com           14
                      Conclusions

    Pricing
          • Erosion – up to 60~70% per year from 2007 – 1H2009
          • Some flash cards get a premium of up to 3X more for same GB
    High Capacity Introductions
          • Doubled in 2007 – 2008. Where are they in 2009?
    SSD
          • Retail U.S. category emerged in 2007, now has 27 suppliers
          • Trend to watch: make lower cost xxGB vs. make highest capacity
    $/GB
          • $1.25/GB is the lowest retail price detected for WK26-2009 for
            16GB USB
            = Approx. 2/3 price erosion from the same week a year ago
Santa Clara, CA USA
August 2009                                                     www.PriceG2.com   15
                      Thank You
                      andy@PriceG2.com




Santa Clara, CA USA
August 2009                              www.PriceG2.com   16

				
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