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One industry that defied the slowdown and went on to growat a pace of over 50%is the ever burgeoning market of storage peripherals. It includes devices such as flash/pen drives, flash memory cards and sticks (that are used in mobile handsets and digital cameras), external hard disks, MP3/MP4 players, and digital cameras. What further helped the market in FY 09 was reduced duty structure introduced by the Government of India, post Budget 2008. This new and flexible duty structure not only helped importers in flooding the Indian market with these fast moving products, but also stabilized the average selling price (ASP) of these devices hence, giving an additional boom to the market. Another important changeover that took place with the introduction of current duty structure is the gradual decline of gray market that until previous fiscal, formed a large chunk of the market. However, parallel imports still dominated the market and is encouraged by the principals themselves.

Flash your Style
With the increase in demand for digital data storage requirements, coupled with extensive mobilityassociated with modern day-to-day business lifedemand for external and portable storage mediums have been growing heavily. Both flash drive and flash card markets have been growing phenomenally over the last two years. Although, the market was affected slightly due to the slowdown, yet business was good in both product categories. What was more visible was the rising demand for high-capacity pen drives. Today, the entry level capacity for a flash drive is 2GB/4GB which constitutes 70% of the market. The demand for 8GB flash drives followed by 16GB too has gained traction over the last year.

CyberMedia Research  DQ Estimates

The authorized flash market (for cards and drives) was dominated by the likes of Transcend and Kingston; despite duty cuts there was still a significant market for parallel imports, which too was dominated by these vendors only. Even as mobile phones keep on growing, the market for flash cards has been increasing exponentially; pen drives today are perhaps the most ubiquitous IT product

The flash market is one of the biggest growing segments in India. However, due to its substantial dependence on parallel imports, apart from business generated through authorized distributors, it is very difficult to estimate the correct size of the market. And, surprisingly, the model is highly supported by the principals themselves. The market is primarily fed by China and Taiwan, and runs purely on cash transactions. It is a high volume business, conducted through both IT and telecom channels as well as large format retails. However, with the current duty structure in place, FY 09 witnessed a major decline in parallel imports.

The end customer pull for Transcend in the flash market is very high and its popularity is fast increasing. Kingston, however, is its biggest competitor. Both the brands offer a similar product range, and have an aggressive pricing and strong channel programs. The horse race has prevented both the brands to cement the numero uno position, and the rankings alter between the two on a monthly, and sometimes even on a quarterly basis. One major issue pertaining to Transcend is its lack of any local base in India, resulting in a poor structure of distribution. The fact that it has appointed too many national, regional, and local distributors along with its extensive parallel importers, the competition among its channel has risenensuing price undercutting and a volatile distribution system.

CyberMedia Research  DQ Estimates
The commoditization of external hard drives could lead to them gradually replacing flash (pen) drives; the decreasing price differential between the two would lead the trend. While a 16GB Flash drive today would cost Rs 3,200 without taxes, a 250GB external hard drive would come for Rs 3,000 without taxes	iPod and Sony Walkman were the preferred MP3 players by the masses and connoisseurs; however, most iPods were being purchased through the parallel import route only

Kingston, on the other hand, has a more organized distribution model and a local team to drive the same. The move has helped Kingston to regularize its product distribution and availability as well as protect its partners. The third big name in this category is SanDisk. It was doing good business but it lost momentum over the last one year, thus giving away considerable market share to both Transcend and Kingston. However, SanDisk has been on the forefront in terms of setting new trends by launching innovative and stylish product ranges, attractive channel and end user schemes, and marketing activities as well as defining new market segments.

Furthermore to the rise in mobile phone adoption across India, the market for flash memory cards have been witnessing an exponential growth. As the use of multimedia applications like music, video, pictures, and games supported by multimedia handsets are increasing, the consumption of multimedia cards (MMCs) are growing tremendously too. With multimedia handset prices continuously dropping, and the growing insurgence of cheaper Chinese handsets in India, the market for flash cards has been boosted even further. The other visible trend in the last year is the significant growth in microSD cards consumption. Initially, these cards came with adapters, a trend that was altered by SanDisk, as it withdrew bundling adapters within the package. This move played a vital role in decreasing SanDisks popularity among users. However, other brands too gradually followed the same path and it became a visible trend in the last year. As the flash market started migrating to higher storage capacities, a lot of activities were witnessed from the principals as new products with better design and style were launched at regular intervals, especially targeting niche segments. These products are also becoming hugely popular as corporate gifts and are increasingly replacing CDs and DVD.

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