Macro Environment Legal And Political Intellectual Property Law Essay

Intellectual belongings is really of import for engineering companies because from merchandise design, merchandise development to merchandise fiction, all of them are about complex patents. Patent is the cardinal constituent to protect a extremely advanced company and is based on the rational belongings jurisprudence. It non merely gives the company a privilege to commercialize the engineering, but besides helps the company to gain money through licence and royalty gross. On the other side, every loss of an rational belongings case will harm a company from fiscal side and brand-image side. Since brassy memory market has a history of over 20 old ages, there are already tonss of patents existed. However, due to demand of brassy memory is surging in these 10 old ages and the engineering promotion, there are besides new patents and cross-license understandings come out in the market which make the industry harder to acquire in. Although the market turns more complicated than earlier, companies such as SanDisk who have extended patent portfolios still can be strong and do money through a combination of licence and royalty grosss.

SanDisk is one of the first movers enter into brassy memory market. The laminitis, Dr. Eli Harari, is a well-known expert in non-volatile memory & A ; storage system and holds more than 100 patents in this field.[ 1 ]Therefore, constructing up engineering accomplishments and power of patents are the cardinal scheme of SanDisk for a long clip. They have more than 1,100 patents in the U.S. and over all more than 2,100 patents worldwide.[ 2 ]Besides, since SanDisk is an expert in the brassy memory industry more than 20 old ages and bulk of their concern are close to consumer electronic merchandises, they are able to anticipate the future demand of brassy memory engineering and maintain investment in R & A ; D to develop new engineering to beef up their leader power. Furthermore, the rational belongings jurisprudence non merely protects SanDisk ‘s expertness privilege but besides gives SanDisk an chance to bring forth gross from licencing. In 2009, 11.6 % of SanDisk ‘s gross is from licencing their engineering to their rivals and in the last three financial old ages, their licence & A ; royalty gross add up to $ 1.37 billion.[ 3 ]

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Compared to difficult disc thrusts, brassy memory storage devices are easier to transport about. This, in bend, has provided a rise to an issue sing virus spreads or safety of electronic confidential informations through USB thrusts or external difficult thrusts. Some authorities and companies do non let employees to utilize their personal USD thrusts in the office. In order to procure clients ‘ informations and computing machines, SanDisk brings out a series of merchandise called Cruzer with 256-bit AES encoding and cooperates with anti-virus package supplier McAfee to give clients a “ safe zone ” during informations dealing by USB thrusts. Peoples who use Cruzer USB thrusts can utilize watchword to protect their files without been deleted or stolen by other people and they do non hold to worry about the virus onslaught during informations transmittal because every file will be scanned by McAfee anti-virus package to corroborate the information is clean. Those engineerings and services non merely protect clients ‘ sensitive but besides earn the trust and market portion from endeavor and authorities clients.

Finally, authorities ‘s policy besides benefits companies in brassy memory market. The Indian authorities decided to develop a $ 35 tablet with two Gs of brassy memory for pupils to make a more advanced and internet-accessible environment in academic establishments.[ 4 ]Furthermore, there are an increasing figure of schools are be aftering to utilize tablet personal computer as a powerful tool to better instruction quality and pupils ‘ acquisition experiences. Those determinations will profit tablet brassy memory suppliers such as SanDisk to widen their market to younger coevals.


Patent violation is a large menace in a hi-tech industry. The menace comes from two sides: One is from countersuing by rivals and the other from the company ‘s patent violation by rivals. Normally, the case needs both companies to pass a plentifulness of money and take a long clip to make the concluding judgement. It non merely harms company ‘s repute but besides company ‘s stock monetary value. Further, if a company takes infringement actions of peculiar patent but loses, other rivals can get down utilizing similar engineering without being charged for trueness.

Additionally, enlargement into emerging market economic systems besides presents a menace because the rational belongings consciousness is non established. Particularly for SanDisk, in the financial twelvemonth 2009, the OEM merchandises generated USD 1,586.8 million in their entire gross which increased 54 % from 2008.[ 5 ]Further, tonss of SanDisk ‘s OEM clients are located in China. Currently, China does non hold a wholly and extremely developed legal system to protect rational belongings rights. This consequences in the prevalence of imitative goods in China. For illustration, there are already 1000s of bogus iPhone and iPad before Apple officially released their merchandises in China. Since there is no certain timeline that the enforcement of bing and future Torahs will be completed, such incompatibility would convey hazards to SanDisk to make concerns in China. Although SanDisk may be able to set their attempts to contend with plagiarist companies, the consequences may be limited if the legal system is non mature.

Besides, SanDisk ‘s licence and royalty grosss may fluctuate or worsen in the hereafter due to licence understandings and patents expire or if licensees fail to execute on their contractual duties. Since about 10 % of SanDisk ‘s gross is from licencing, one time they do non regenerate the licence with clients successfully or any license expires, SanDisk will lose a batch of money. For illustration, in the 4th one-fourth of financial twelvemonth 2009, SanDisk ‘s licence and royalty grosss declined because the freshly signed licence understanding with other companies presented a lower monetary value than the former understanding.[ 6 ]



The planetary brassy memory market suffered a downswing in 2008 due to hard economic status. However, the market bounced back in 2009 and keeps turning in 2010. Market prognosis besides mentioned that there is a high possibility that brassy memory market would contront deficit in the about hereafter. The deficit of brassy memory consequences from the increasing demand of portable electronic devices such as iPod, smartphone and tablet personal computer.

Although SanDisk reported a net loss of USD 1,986.62 million during 2008[ 7 ], the net net income of SanDisk was USD 415.31 million during the financial twelvemonth 2009.[ 8 ]It shows that the company made a important betterment in the fiscal field. From the macroeconomic prospective, SanDisk ‘s success should impute to the economic recovery and the turning demand of electronic merchandises. Besides, the company besides reduced disbursement on operations, R & A ; D and HR. While SanDisk has spent less money ( USD 384.2 million ) on their R & A ; D activities in 2009, SanDisk now has a strong balance sheet with a healthy hard currency flow status to be able to increase their investing in R & A ; D and implement strategic acquisition in the hereafter

Geographically, bulk of SanDisk ‘s concerns are outside of the U.S. In 2009, Taiwan surpassed U.S. bring forthing 28.32 % of SanDisk ‘s entire gross. Furthermore, SanDisk besides has intensive concern activities with OEM companies and large retail merchants in the other Asiatic states. Since Asia is a major country of OEM concern and a powerful engine of planetary economic system, SanDisk ‘s scheme of widening concerns to Asiatic market and edifice strategic confederations with Asiatic rivals such as Samsung and Toshiba will do the company more competitory.


Economic downswing earnestly harmed planetary brassy memory market in 2008. SanDisk besides reported a net loss of USD 1,986.62 million at that financial twelvemonth.[ 9 ]Because tonss of NAND brassy memory devices are used on electronic merchandises, the hard economic status non merely lowers consumers ‘ motives to pass money on fancy merchandises such as smartphones, iPad, Apple Air but besides gives big companies such as Sony and Apple force per unit area to prorogue their new merchandise lines. Since SanDisk has a broad scope of clients from OEMs, electronic merchandise companies and retail merchants, their concerns are correlated to the macroeconomic status.

The other menace to SanDisk is the competition and nature of planetary brassy memory market. Harmonizing to the Moore ‘s Law, the sum of storage that a maker can squash onto a card doubles about every 18 months. It brings out the fact that the monetary value of brassy memory will worsen quickly as the engineering advances the capacity of brassy memory in a short term. Therefore, that is the ground why the monetary value competition of the brassy memory devices has been intensive even though the capacity and velocity of transmittal are improved clip by clip. Two old ages ago, a 4GB SDHC SD memory card cost around $ 20 on, and now it merely costs about $ 4. Those monetary value fluctuation harms company like SanDisk earnestly as their gross revenues Numberss do non increase or fabricating costs do non diminish compatibly to countervail the monetary value dip.

Finally, currency exchange rates and duty & A ; import revenue enhancement in different states are besides possible menaces to SanDisk. Especially SanDisk has a joint venture relationship with Toshiba on brassy memory fiction. Since the installation is in Japan, SanDisk ‘s investing in the installation and material procurance from the mill are dominated in Nipponese hankering. Last twelvemonth, Nipponese hankering rose against USD ; hence, this increased SanDisk ‘s costs on their regular disbursement on Nipponese installation. Further, making concern in emerging market besides increases the exposure of SanDisk in unstable foreign exchange environment. If the USD is lifting, it makes consumers in states disinclined to buy SanDisk ‘s merchandises due to expensive monetary value. Furthermore, different duty and import revenue enhancements make it difficult and complicated for SanDisk to vie with other rivals in the international market.

Social and Demographic


After the recoil of the economic recession last twelvemonth, SanDisk could profit from a turning demand of desktops and laptops. IT research and consultative company Gartner said it expected world-wide PC gross revenues to entire 367.8 million units, up 19.2 per centum from the 308.3 million units shipped in 2009.[ 10 ]The grounds why demand grows are non merely because people are more willing to replace their computing machines, but besides because companies decide to put money on new hardware, IT devices and waiters. Furthermore, the new released Window7, MacBook Pro and Mac Air are besides market drivers to lure people to pass more money on new playthings. Since SanDisk provides a broad series of merchandises, they are able to portion the growing with electronic merchandises suppliers.

Furthermore, the lifting demand for consumer electronics such as digital cameras, smartphone, iPads and MP3 participants is expected to drive the growing of brassy memory. Especially in some emerging markets such as China and Indonesia, the demand for electronic devices is strong due to the growing of personal disbursals in domestic market. Besides, there are an increasing figure of non-brand electronic merchandises become popular in China. Because China has the biggest population in the universe and about every electronic device such as smartphone and MP3 participants are embedded with NAND brassy memory, it is a lifting market for SanDisk to tap in. Besides, other freshly released merchandises such as DSL-like digital camera and tablet personal computer besides need NAND flash memory for storage solution. All these demands create a large chance for SanDisk. By the manner, as tonss of the electronic devices are manufactured by OEM companies such as Foxconn and SanDisk has changed their scheme to travel their mark concern from retail merchants to OEM companies, as OEM ‘s concern grows, SanDisk will hold more concerns.

Apple is one of the most of import clients for SanDisk. From iPhone, iPad, iPod to Mac Air, Apple ‘s merchandises are presently the craze in the market. In Apple ‘s merchandise series, brassy histories for approximately 14 % of the iPhone 4 ‘s cost, 11 % of iPad stuffs, 33 % of the new iPod nano, 23 % of the new AppleTV, and besides a important sum of cost for the new MacBook Air.[ 11 ]The more brassy memory it needs for a peculiar merchandise, the higher per centum of the merchandise cost is on brassy memory. Since tonss of Apple ‘s merchandises go with NAND flash memory device, SanDisk is able to widen its trade name acknowledgment and market incursion.

Furthermore, smartphones and tablets are the following two star merchandises in electronic device market and both of them conveying a immense market for brassy memory providers. About half of all nomadic phones shipped worldwide in 2010 are estimated to hold flash-based memory and every tablet will hold embedded brassy memory. SanDisk is responsible for 33 % of the entire Gs of brassy memory supply in the nomadic phone market.[ 12 ]The market portion is expected to increase as more nomadic phone users will replace their old cell phones to smartphone. Furthermore, non merely Apple, many companies besides release their tablet devices such as Samsung ‘s Galaxy, RIM ‘s Playbook, HP ‘s Slate and so on. Harmonizing to IDC study, planetary tablet cargos are expected to make 46 million by 2014[ 13 ]. Because SanDisk has provided brassy memory solution for nomadic devices for a long clip, tonss of tablet shapers who besides sale nomadic phone devices may see SanDisk as one of their preferable sellers for tablet memory.


The biggest menace to SanDisk comes from unstable market demand. Because the bulk of SanDisk ‘s merchandises are sold straight or indirectly to consumer market, it is hard to calculate the market demand accurately. Particularly consumer electronic merchandises are capable to seasonality. The 4th one-fourth of each financial twelvemonth is normally the extremum season. If SanDisk ‘s OEM clients or electronic merchandise suppliers ‘ can non hike gross revenues gross in the hot season, SanDisk ‘s operation consequence and fight will be affected. Furthermore, brassy memory shapers ‘ quarterly gross revenues are based on orders they receive in that one-fourth. They non merely have to trust on OEM clients and distributers to cognize how many flash memory merchandises are needed this one-fourth, they besides have to maintain updated information with wafer providers to understand the monetary value of natural stuff and capacity degree. Therefore, what normally happens is that brassy memory shapers over estimation or under estimation market demand and eventually they have to compose down their extra stock list degree.

Furthermore, it is difficult for brassy memory suppliers to obtain the merchandise trueness in the current market. Peoples care more about monetary value and capacity instead than trade name name particularly there are a broad assortment of similar merchandises existed in the market. Further, the demand of brassy memory capacity will increases as the monetary value of brassy memory merchandise decreases. If SanDisk is non able to cut down cost per G at an equal rate or higher rate than monetary value diminution per G, their market fight and fiscal status will endure.

One of SanDisk ‘s fight is a broad assortment of brassy memory solutions. However, if the electronic merchandise suppliers stop utilizing SanDisk ‘s card format or consumers change their penchants, SanDisk ‘s operation and market portion will be affected. For illustration, SanDisk is in a joint venture with Sony for a long clip. They co-released a series of brassy memory card called Memory Stick PRO. The joint venture benefits SanDisk to bring forth a plentifulness of grosss from this peculiar format memory card. However, due to SD format is widely used on electronic merchandises now, Sony acclaimed this twelvemonth that they are traveling to both support for SD/SDHC and memory stick format in their digital cameras and camcorders. Furthermore, they are besides traveling to let go of their ain SD card. Those alterations will harm SanDisk ‘s market portion and fiscal status.



SanDisk is a brassy memory innovator and emphasizes on their strength of patent portfolio for a long clip. They besides have cross-license understanding with other strong companies such as Intel. As brassy memory merchandises are widely used in electronic merchandises, SanDisk ‘s engineering is able to back up different format of brassy memory devices. Further, their engineering generates tonss of money from licencing and trueness gross. In the hereafter, SanDisk besides looks for an alternate engineering for current brassy memory storage solution. Therefore, there are tonss of chances for SanDisk from now to hereafter.

From technological position, it is possible that brassy memory based solid province thrusts ( SSDs ) will replace traditional difficult discs ( HDDs ) as a new informations storage solution for laptop and desktop in the hereafter. Flash memory is faster, more stable and uses 10 times less energy. Currently, netbook, Mac Air and about all tablet merchandises are utilizing NAND brassy memory. In the long-run, endeavor clients would likely update their current storage devices from HDDs to SSDs. Although the monetary value of per NAND memory unit is higher over difficult disc thrust, but as the two storage engineerings come near to monetary value para, HDD loses its monetary value advantage. Furthermore, in order to take down fabrication cost of SSD so that the monetary value of the merchandise for terminal users becomes more compelling, SanDisk besides implements MLC ( multi-level cell ) engineering into SSD. The MLC engineering allows brassy memory to hold denser storage and fewer cost. Since SanDisk is the first company to commercialize MLC engineering, their expertness makes them more competitory on SSD ‘s merchandise development. Besides, if the bulk of clients transfer from early adoptive parents to major adoptive parents for SSD Oklahoman than SanDisk ‘s outlook, the company is able to obtain more market portion and command the merchandise criterion in the brassy memory market.

Finally, because of the changeless physical fact that the storage capacity for NAND brassy memory will make its restriction in five twelvemonth, memory storage suppliers are seeking to happen the following coevals of memory engineering. SanDisk is a favorite in developing “ 3D ” brassy memory with multiple read-write capableness. Presently, the paradigm of this engineering is merely able to be written one time. SanDisk ‘s R & A ; D squad is working on rewritable 3D brassy engineering with their joint venture partner-Toshiba. The research is estimated to take a twosome of old ages. However, SanDisk is trusting to be the first mover commercializing this riotous engineering to the market.

By far, NAND flash memory is still the most popular solution for memory storage. Because SanDisk provides a broad scope of flash removable storages such as Compact Flash, SD, microSD and they besides keep back uping OEM clients to develop customized embedded flash memory devices. Therefore, SanDisk can bask their competitory advantage for a piece.


Disruptive engineering is a menace to SanDisk. Because brassy memory market is a mature merchandise rhythm industry, in order non to be selected out of the market, every company is devoted to contrive riotous engineering to replace NAND brassy memory or develop new industry criterion to widen the control power in the market. If SanDisk ‘s developing engineering or new invented merchandises are non adapted by consumers as they expected or their rivals let go of a more advanced and economical engineering, SanDisk ‘s competitory advantages and market portion will be harmed. For illustration, SanDisk anticipates flash-based SSDs to replace difficult disc thrusts in devices such as laptop and desktop computing machines. However, it may take a few old ages for people to be wholly involved in the acquisition curve. The riotous engineering such as on-line storage service, cloud calculating engineering or alternate format of brassy memory devices may destruct SanDisk ‘s design before SSDs become to the full commercialized.

Besides, the procedure of doing brassy memory requires high-advanced engineering, clean environment, disciplined operation procedure and restricted merchandise trial and the job of fabricating output may non be identified until stuffs are moved to production procedure or the merchandise is manufactured. All these errors may ensue in bringing holds or excess costs and impact the grading of SanDisk ‘s brassy memory merchandises.

Furthermore, the correlativity between NAND flash memory and DRAM memory presents a menace to SanDisk. Many companies manufacture both DRAM and NAND wafers and besides produce brassy memory device such as Samsung and Toshiba. If the demand of DRAM market diminutions, those companies will reassign their DRAM wafer capacity to do NAND wafer. Since flash wafer demand will lift over DRAM wafer, it is extremely possible that the competition in the brassy memory market will be more intensive.

Finally, SanDisk is in a extremely cyclical and competitory concern. The brassy memory industry is known for its short life rhythm, changeless and rapid technological alteration, fast monetary value diminution, complex patents and broad fluctuations in merchandise supply and demand. Because tonss of SanDisk ‘s merchandises are related to consumer electronic merchandises such as cell phone, laptop and digital camera, it makes the market prognosis for brassy memory market more hard. In the engineering rhythm of brassy memory market, a new engineering is required a long clip in the innovation and development phases but turns from adulthood to overshadow phase in a short clip. Therefore, the brassy memory industry normally confronts a important extra supply, high stock list degrees, and accelerated diminutions in selling monetary values.



Globalization benefits SanDisk whose merchandises are sold worldwide. Particularly in the last 10 old ages, bulk of electronic device companies have been outsourcing their fabrication portion to Asia or Latin America which have lower labour cost and bunch of different constituents shapers in the same country. Currently, SanDisk operates their wafer fiction installation in Japan, in-house assembly installation in China. They besides outsource their wafer testing, merchandise proving merchandise assembly to companies in China and Taiwan. Because SanDisk locates their fabrication system in Asia, they are able to present their merchandises to OEM clients & A ; third-party subcontractors in a short clip and supply faster and seamless services to their clients. Therefore, globalisation benefits SanDisk to salvage operating cost and extend concern relationships with Asiatic companies.

Furthermore, joint venture and acquisition are besides chances for SanDisk. Currently, SanDisk has a close joint venture relationship with Toshiba in brassy memory fabrication and new engineering development. The significant bulk of SanDisk ‘s brassy memory supply comes from SanDisk-Toshiba ‘s installation in Yokkaichi, Japan.[ 14 ]The confined resource under joint venture ‘s understanding provides SanDisk a stable supply of stuffs without trusting on other upstream companies such as Hynix and Samsung. Besides, SanDisk and Toshiba besides develop 3D brassy memory engineering as a squad.[ 15 ]The new engineering is an alternate engineering of NAND brassy memory and is riotous in the market. If the engineering can be commercialized before other rivals provide permutation into the market, the joint venture will convey a immense success for both companies. Except joint venture, SanDisk besides views acquisition as a scheme to beef up their concern. In 2006, SanDisk acquired Israeli memory supplier M-Systems for about $ 1.55 billion.[ 16 ]From M-Systems, SanDisk received engineering that can speed up and streamline their MLC ( multi-level cell ) development. Furthermore, patents from M-System besides strengthened SanDisk patent portfolio and helped SanDisk in the dialogues on reclamation of the patent licensing understanding with other rivals.


The competitory planetary market is a large menace to SanDisk. From the brassy memory was invented until today, the engineering, format of merchandises, operation procedure and application method change a batch. The mature market brings a batch of rivals worldwide. These rivals besides implement thin fabrication, outsourcing scheme, strategic confederation and aggressive pricing program to minimise their cost and maximise their market portion. The planetary market environment of the brassy memory industry has undergone cardinal alterations. Further, the diminution in growing of traditional NAND flash applications and farther miniaturisation of the NAND flash engineering push brassy memory shapers busy on puting in R & A ; D and seeking to widen the merchandise life rhythm. There are so many power rivals in the market such as Samsung, Toshiba, Intel, Spansion, SanDisk and Micron Technologies.[ 17 ]Some foreign rivals such as Samsung have more resources and well-recognized trade name name over SanDisk. Those rivals have broader scope of concerns from wafer industry to DRAM and brassy memory merchandises. Therefore, they have ability to command the stuff and market monetary value.

Besides, runing quality of outsourcing companies and 3rd party contractors could be menaces to SanDisk. Currently, tonss of SanDisk ‘s operation systems are located in Asia. From wafer fiction, wafer proving, merchandise assembly to merchandise testing, some of operations are in-house and some of them are outsourced to third party subcontractors in China, Korea and Taiwan. When all runing systems run efficaciously, SanDisk is able to make cost effectual fabrication rhythm ; nevertheless, if the 3rd party subcontractors are non able to offer sufficient resources to SanDisk or their qualities do non run into SanDisk ‘s demands, SanDisk cost competiveness will be harmed. Further, since SanDisk does non hold any sole relationship with subcontractors and is non able to supervise those subcontractors exhaustively due to far distance, they have less control on those parts of operations.

Finally, unstable currency exchange rate, macroeconomic status in different parts due to political or military factors and complex authorities ordinances in the planetary market will harm SanDisk ‘s concern earnestly. Furthermore, natural catastrophes such as temblor and hurricane would possible to damage SanDisk and their providers ‘ installations in that injury SanDisk ‘s operation and fiscal status.

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