The Digital Photography Company? 17th Nov. 2011 Lexar Media Inc. The Digital Photography Company? 17th Nov. 2011

Lexar Media Monica Fan Denise Ahern Victoria Sheehan Sean O’ Leary Eimear Clancy

Lexar Media : General Overview John Reimer –President and CEO 1997 In 2001 branched in USB marketplace Takeover in 2006- Micron Lexar Media was founded in 1996 under the name Lexar Microsystems, when 30 employees of Cirrus Logic, Inc formed this new entity. Mike Assar and Petro Estakhi, key technical leaders were among the 30 employees. There’s the controller and the flash memory, with firms such as Toshiba, Samsung and Hitachi controlling almost 100% of the flash market. Lexar therefore focused on developing controller technology. In 1997 John Reimer was hired. Lexar was looking for further growth and new direction. Denise is going to talk more about the impact of John Reimer. Reimer had previously worked with Motorola, SanDisk (Lexars main competitor), Texas Instruments and Fujitsu. He was also the founder of the Personal Computer Memory Card International Association-PCMCIA. The PCMCIA set the worldwide standard for PC Cards. Reimer’s background allowed him to see new ways the existing technology could be used. Perhaps more importantly Reimer was also passionate about photography. Back in 1997 imagery was still pretty basic but Reimer was able to anticipate the technology that would be required. Efforts were refocused on developing a set of products targeted on digital camera users. The two-tied distribution involved selling both to camera manufacturers-OEM, Original Equipment Manufacturers and directly to the retailers themselves. The manufacturers side was low margin but built up volume. More importantly the OEM side of sales built strong relationships with big players in the market. In the retail side Lexar pursued a “push” strategy. "Taking the product to the customer“ while pull is "Getting the customer to come to you“. Differentiation: Speed and Compatibility, Established digital film as a category for the retailer- prior to this camera memory was sold in store with computer memory. Lexar invested in training- both salespeople and the consumer-with laminated cards of info and web based training.

Market Flash Card Market

Market Particular for Digital Photography Market

Strategies Luring Market: Digital Photography Focus Distribution Strategies Original Being direct to Retailers Equipment “Push” Strategy Manufacturer Relationships Push: bright color-yellow add the brand name on the products

Crossing the Chasm Different Customers Segmentation Different Approaching Methods

Three Segments in the Market Professionals Pro lines Ad & Promotion Prosumers Premium lines Amateurs Value lines Target professionals with Pro lines of digital film

Reputation Crossing the Chasm Average Camera Users Professionals 3C Campaign Lexar-using Elite Photographers A free data recovery service to customers If you wanna buy a new camera, who you will ask for, for me, I will go to professionals to hear their opinion. Professionals Reputation

John Reimer CEO and President 1997- 2004 Passionate about Photography Former VP of SanDisk, Lexar’s Main competitor Visionary

How Reimer successfully established the Lexar brand Company focused solely on one market, digital photography Aimed it at the right market, professional photographers

Why were Lexar Media so successful? Distribution Strategy: Two-tied strategy: sell to both camera manufacturers and directly to retailers Partnerships: Strategic partnerships with Sony, Samsung and Olympus Product: Proprietary technology made the digital film up to three times faster than their competitors

SWOT Analysis Strengths: Differentiated product and market strategy Strategic relationships Cards certified for “Digital Film Compliance” Weaknesses: Too focused on photography Purchase flash memory from external providers

SWOT Analysis Opportunities: Memory used via USB port Create new relationships with other camera brands Threats: SanDisk is their major competitor Relationship with Sony could break down

Lexar: Developments Since 2001 2001: After missing Quarterly numbers, Printroom.com is sold to it’s original founders. Shoot & Share and SayCheese.com are discontinued. 2002: Lexar signals it’s diversification as a company by removing the words “digital film” from its packaging.

Lexar: Developments Since 2001 Lexar announces and ships it’s first USB Flash Drive. 2003: Lexar enters the MP3 market with it’s JumpDrive Music player.

Lexar: Developments Since 2001 2004: Lexar agreed a deal with Kodak that allows it to distribute flash cards branded with Kodak’s name. Lexar also entered the gaming storage market. Although revenues continued to grow strongly from 2003 – 2005, Lexar was still unprofitable and losses were increasing. SanDisk, cash rich and profitable, was able to slaughter the competition as regards pricing. Lexar was at a crossroads and needed a new strategy.

Lexar: Developments Since 2001 2006: Micron, one of the world’s leading semiconductor companies, acquired Lexar for $850M. As Micron developed it’s own NAND, the biggest cost for card makers, Lexar was able to avail of significant savings. Lexar had previously sourced flash memory from Samsung.

Now Subsidiary of Micron Technology, Inc Digital photo/video Gaming Personal Storage Mobile storage Since the takeover in 2006 by Micron Technology Lexar Media has become a subsidiary. They are no longer listed on the stock exchange and aren’t under any obligation to prepare separate year end accounts. Its hard then to see what percentage of revenues are being plowed back into R & D. PSP and PlayStation 3, Nintendo 3DS, and Wii  

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