How to tap into the 'big data' dividend
With the term 'big data' on the rise, more and more tech companies are looking to get in on the action. And, of course, more and more companies are already benefiting from it.
The data storage industry, which is the foundation of big data, is the most direct beneficiary. SanDisk, a 25-year-old flash memory company, has seen this clearly, with revenue growth of $5.6 billion in the past four quarters. It is now a Fortune 500 and Standard & Poor's 500 company.
The company was founded in Silicon Valley 25 years ago by three immigrants from China, India and Israel. When SanDisk was founded, the three founders just thought there would be a market for flash memory technology in the future, but they didn't expect it to be as large as it is today.
On September 17, Sanjay Mehrotra, one of SanDisk's co-founders and its current president and CEO, came to Beijing for an exclusive interview with the 21st Century Business Herald. The Indian-origin executive told this reporter about the company's approach to growth and gave an outlook on the future of the storage industry.
Looking back at SanDisk's history, the 25-year-old company has its own "persistence" and "adaptability". From the beginning, it has firmly chosen flash storage as its direction of development, but it has also been constantly changing its specific products, always catching new industry trends in time.
The core business that underpins SanDisk's development began with simply providing memory cards for Nikon, Kodak, and other camera makers, among others; then the big development of the personal USB flash drive market allowed SanDisk to gain a foothold in the retail market; and then, with the outbreak of the smartphone market, cooperation with OEMs became the center of SanDisk's business focus again.
Now, with the advent of the big data era, both individuals and businesses have higher standards and needs for data storage. SanDisk is also gradually turning its main focus to the SSD market, which Sanjay expects to be one of its main revenue sources by 2014.
"Big Data" Dividend
21st Century: We noticed in the earnings report that the company's performance in the second quarter of this year has improved greatly compared to a year ago, what are the reasons?
Sanjay: There are three reasons, the first is that we have a richer product portfolio, including embedded flash, customized solutions, and multi-chip flash. There is also the fact that in the solid state drive SSD market we have launched a lot of products, including for laptops, for enterprise solutions. In addition, in consumer electronics, we have a wide variety of different types of flash memory product introductions.
Secondly, the industry's demand has been very strong over the past year. 25 years ago, flash memory was just a concept, and now the global market has reached $25 billion, but the growth of this market has just begun. For example, with the rapid growth of content, mobile devices and other factors, the demand for flash memory will grow.
Finally, continuous innovation, good market adaptability, and strong execution are also the most fundamental secrets to success. Continuously exploring new market opportunities through innovation is why SanDisk has continued to evolve and grow over the past 25 years.
21st Century: Now that everyone is talking about the coming of the big data era, is your recent rapid growth related to the big data trend? What will be the new trends in the big data era?
Sanjay: It's true that the demand for storage is rising in the era of big data, for example, there are billions of cell phones that are constantly processing, accessing, sharing, modifying, and storing data. There is a very big demand from consumers now to store rich content, to share that content, to save it for later use. So the storage opportunity is very, very large.
At the same time, the demand for computing and analytics applications based on this storage is rising, and storage devices will play a very important role. In particular, flash-based storage and computing, computing speed can be faster, and it is lower power consumption, the overall cost is also lower, which is to promote the development of flash memory opportunities.
We also have our own characteristics in terms of the diversity of user needs and differentiated competition in the era of big data. For example, in the area of data security, in 2012 we acquired two software companies, one called Flash Soft and the other Schooner Information Technology, so that we can utilize software to accelerate the deployment of hardware, including applications in databases and other areas to better serve our customers, which is what sets SanDisk apart from other flash memory companies.
This is what sets SanDisk apart from other flash memory companies.
21st Century: SanDisk's current success can be attributed to its ability to capitalize on the explosive growth of data storage, but how long will the storage industry's growth dividend last?
Sanjay: SanDisk is 25 years old, but I think still very young. Data is growing very fast right now, and we still have a lot of opportunities in the storage space. Not only in the traditional consumer electronics market, the mobile market, but also in the future we can foresee a lot of flash storage opportunities, such as some new concepts, new markets will be opened to the flash storage industry. For example, wearable devices, including some smart connected home devices, including automotive and so on.
The 21st Century: What are the opportunities and challenges of new markets such as wearables?
Sanjay: Wearables will be another big market for flash memory and the front line of the company's future business development. The opportunity and challenge is how to drive the adoption of flash technology in these new areas, and the capacity and competitiveness of its products, so that we can create a balance of supply and demand for our products in the wearable market in the future. One of our major strengths in wearable devices, which is currently in its infancy, is the scale effect in terms of capital, brand and technology.
The Way to Grow
21st Century: As a company that has been growing for 25 years, SanDisk has always insisted on making only flash memory. When the company was founded, did you foresee that the storage industry would grow to the size it is today?
Sanjay: What we've accomplished now would have been unimaginable 25 years ago when the company was first born, because flash technology was just a concept at that time, and there was no such industry, and by 2012 we knew that the total market capitalization of the flash industry globally was probably over $25 billion.
Over the past 25 years, SanDisk has led the way in innovations in flash memory technology, including digital technologies, digital platforms, including later smartphones, tablets, and flash-based enterprise storage. Together with our partners, SanDisk has created virtually all of the industry's most innovative solutions and products, including compact flash cards, SD cards, and the flash products that are now commonly used in smartphones and tablets.
Our continued investment in flash memory innovation has resulted in SanDisk holding nearly 4,900 patents covering our products, including technology, design, assembly lines, testing, and applications for flash memory products, the largest and most comprehensive portfolio of patents in the entire flash memory industry.
The 21st Century: You mentioned that flash memory technology started out as a concept, not quite an industry, so how has SanDisk evolved and survived to this day?
Sanjay: In the first few years, we were working with companies like Nikon and Kodak. There was no Internet back then, and the quality of digital photos was not as good as film. It was only after the Internet became available and digital cameras took off that our business really took off. Because sharing photos over the web started to become easier and more popular.
Later, as these technologies in digital imaging continued to mature, we adapted very quickly to address the opportunities presented by the digital imaging market, branding ourselves as SanDisk, doing flash cards, doing imaging cards, doing USB products.
We feel that the business of flash memory is just beginning, and we anticipate more and more opportunities in the future in devices such as cell phones and tablets. Due to the development trend of content, mobility and connectivity, we expect that every device with flash memory will have 32GB of flash storage in the future.
"21st Century": There are quite a number of companies doing flash memory now, what are SanDisk's strengths? What business will it focus on in the future?
Sanjay: The first advantage is innovation. SanDisk has been providing innovative storage solutions for the past 25 years and looking for innovative new market opportunities.
The second is our vertical integration capabilities. This includes research and development from the very beginning, to flash transport, to flash chips, to flash control systems, including the software that supports flash applications.
The third advantage, which I would like to bring up in particular, is that we have the capability of mass production, which is very important for some of our larger customers.
We will look at three major markets: the first is mobile devices. For major mobile devices including smartphones, tablets, etc., we can provide a full range of products; the second category is the computing sector, providing customers with solid state drive SSDs, not only for laptops, but also for data centers, and enterprise storage applications, etc., providing them with our products and solutions; and the third category is the consumer market. Mainly self-branded retail products, including USB flash drives and so on.
21st Century: There is a recent trend that some companies are starting to move their production bases from China back to the US.
Sanjay: Currently all of our production bases are in Asia, in Japan, Shanghai in China, and including our partner's factory in Shenzhen, and Taiwan. All the production bases are in Asia. We also don't have any plans to move production back to the United States.
We started our own factory in Shanghai back in 2006, and now 80 percent of SanDisk products in China are made in that factory. We have more than 1,400 engineers in service and more than 1,800 production staff at our Shanghai facility, and we're actually expanding our operations in Shanghai. In addition, we have a marketing agency and organization in Shanghai
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