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You Use Its Products but Don?t Know Its Name

One of the country?s largest makers of memory chips starts thinking outside the boxParsippany

Gadgets are totally in style these days. Everyone from adolescents to elders can be seen listening to sleek MP3 music players that store as many songs as a radio station. Failure to own a digital camera can lead to feelings of uncoolness as one drops film at the corner drugstore.
Hot as they are, all of today?s powerful toys have one thing in common: a dependence on compact memory chips. Filling that need is part of PNY Technologies? plan for growth.
?The company realized five years ago there were going to be a lot of emerging technologies,? says Tony Gomez, PNY?s vice president of marketing and sales. The Parsippany-based firm, which for most of its 20 years focused on making memory chips for computers, is going to be ready.
PNY Technologies was founded in 1985 by CEO Gadhi Cohen, a former captain in the Israeli army. After his discharge, Cohen briefly worked for an uncle in Paris who was a broker in computer memory chips. He then made his way to the U.S. and founded PNY as a buyer and reseller of memory chips to computer companies.
Five years later PNY evolved into a chip manufacturer; it has since grown to become one of the largest in the country. Today it has more than 300 employees, with operations in Santa Clara, California, and France, Britain, Germany and Taiwan. PNY products are sold by major electronics retailers including Best Buy and CompUSA, and by office-supply giant Staples. Gomez says PNY expects to generate more than $600 million in revenue this year and is profitable.
PNY competes with chipmakers like Viking InterWorks and Kingston Technology in the lucrative memory market. Worldwide, memory-device sales were $48 billion in 2004, up from $33.5 billion in 2003, according to market research firm Gartner in Stamford, Connecticut. Computer chips comprised 54.8% of 2004 sales.
Looking for a new avenue to growth, PNY began to make other products. ?In 2000 we started our CD-media business,? says Gomez, with the launch of a line of recordable disks. In 2001 the company began offering flash-media products, memory cards that retain information even when unplugged. In 2002 the company began producing video cards for computers with chipmaker Nvidia. PNY?s products also include memory cards for digital cameras and its own Vibe line of MP3 players.
These new products may help increase the profile of what has been?to consumers, at least?an invisible company. ?An original equipment manufacturer or an end user would buy our memory modules and close the box,? says Gomez. Once the memory is in place, there is little need to see the product again. ?People would then forget what memory module they used,? Gomez says.
So now PNY is thinking outside the computer?s box. In February it launched a line of custom-printed USB (universal serial bus) flash drives sporting college logos. These storage devices, which can hold tunes, term papers and pictures, are about the size of a pack of chewing gum. They plug into ports found on most computers. Compact enough to be carried on key rings, they are alternatives to CDs and rapidly obsolescing floppy disks. The drives cost about $45 each. PNY also sells the drives without college logos.
PNY?s Vibe MP3 player is aimed at the craze for high-capacity music gadgets dominated by Apple?s iPod. The latest Vibe, due in the second quarter, will feature 2GB of memory?room for about 500 songs. Additional features include a USB flash drive, an FM radio receiver and a voice recorder. But PNY may have a tough time nibbling at Apple?s market: The 2GB Vibe has a street price of $299; the similarly priced iPod has a tiny 20GB hard drive with room for 5,000 songs. The iPod, however, does not come equipped with features like an FM radio.
PNY and its competitors in the memory market don?t fear the entrance of new blood. ?I don?t see a lot of new players,? says Ian Teh, president of market research firm InfoTech Trends in Pleasanton, California. ?It?s a very mature market at this point.?
And it has ups and downs: After any initial craze wears off, consumers tend to wait for prices to come down before buying more trendy gadgets. ?There was a bit of upsurge driven by digital photography, but we will probably see a flattening of the market,? says Teh.
But Teh expects PNY to maintain its footing even when the slow days come. ?PNY is a fairly established company,? he says. And there is always another new gadget on the way.

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