CES: SanDisk unveils memory card-based music player

LAS VEGAS (Reuters) - SanDisk Corp unveiled a portable digital music system based on memory cards preloaded with songs, signaling a shift in its strategy to compete against the iPod.

SanDisk announced the Sansa slotRadio player and companion line of slotRadio music cards at the Consumer Electronics Show in Las Vegas on Wednesday, along with other products including tiny, high-capacity memory cards for mobile phones.

The music system is designed for the casual music consumer and consists of a modest-looking player -- square and about as think as deck of card -- that comes bundled with a fingernail-sized memory card.

The card holds 1,000 mostly classic tunes picked from Billboard magazine charts and arranged into playlists according to genre. The player and card will sell for about $100; additional cards, which may be introduced around specific genres, themes or artists, will sell for about $40.

SanDisk, the No. 1 supplier of flash memory-based data storage cards, for years has been a distant No. 2 to Apple Inc in the portable music player market.

A company spokesman called SanDisk a "strong No. 2," adding that its market share is bigger than Nos. 3, 4 and 5 combined. But the spokesman confirmed a shift in focus at SanDisk away from devices mimicking Apple's iPod and toward memory-based units.

SanDisk has yet to live up to Chief Executive Eli Harari's hopes of transforming itself into a "consumer electronics powerhouse," a suggestion he made two years ago at CES. Like Sony Corp, Hewlett-Packard Co and others, SanDisk has failed to make a significant dent in the iPod's total market share.

In the meantime, it has had to deal with overproduction and excess supply in the flash memory industry. Falling demand for consumer gadgets that use portable flash memory, in the wake of the economic downturn, is further hurting the industry.

Still, SanDisk says its low-end music products -- priced under $100 -- have been its most popular. With slotRadio, SanDisk also hopes to woo users uncomfortable with loading an iPod with songs downloaded over the Internet, or ripping songs from a disc, or those who do not have credit cards.

SanDisk said the Sansa slotRadio player is expected to be available for purchase online and at RadioShack stores "in early 2009." Other retailers are likely to follow soon.

So far, the songs on the preloaded cards are a mix of contemporary and classic tunes. Users can purchase new songs via SanDisk's slotMusic memory cards, which it debuted three months ago, a new music format embraced by the four major music companies -- EMI, Sony BMG, Universal Music and Warner Music -- and major retailers.

Separately, SanDisk said its 16-gigabyte SanDisk Mobile Ultra microSDHC and Memory Stick Micro mobile memory cards would begin shipping this month. Millions of mobile phones have a memory card slot, and the cards allow them to play back music, take pictures and record video.

(Reporting by Franklin Paul, editing by Tiffany Wu and John Wallace)