"The most costly ingredient in a flash-based MP3 player is the flash memory. Since we make the flash memory, we essentially remove the middleman and pass that saving directly to the consumer," said Eric Bone, director of audio/video product marketing at SanDisk.
The company also announced that it is to slash the prices of other models in the e200 series, with the 2GB e250 dropping to a very reasonable $139.99, the 4GB e260 dropping to $179.99, and the 6GB e270 dropping to $219.99.
Eli Harari, SanDisk chief executive officer, said, "The battle for us was to establish ourselves as the clear number two, to distance ourselves from Creative, Samsung and Sony. It was quite surprising to us, frankly, how quickly and readily our products were accepted."
The pressure is now on Apple to release a higher capacity iPod Nano, which would probably take the form of an 8GB version. The company may also choose to drop the prices of other iPod models as well.