Manufacturers struggle to maintain the role of pen drive

Saturday morning in the street March 25, the central area of São Paulo. Amid the profusion of 400 thousand visitors daily, one of the most popular trade centers of the country, street vendors advertise, blaring, pen drives the prices of liquidation: a model of 32 gigabytes (GB) of the American Kingston, for example, sells for a mere $ 30, one-third of the amount charged in stores.
The suspect is one of the biggest problems of the manufacturers of these devices: the high flux of illegal products that reach the country across the border of Paraguay, facilitated by the small size of pen drives. But smuggling is not the only difficulty. The pen drives have been objects of desire. Years ago, it was common to include the device in the list of purchases during trips abroad, due to the high cost of the product in the country. As tends to occur in the tech sector, however, prices fell quickly as storage capacity has increased, raising the pressure on profit margins.
The biggest threat appears to come from the internet. Data storage services in the cloud, such as Dropbox and Evernote, are increasingly popular. With them, you can store photos, documents, videos, and music on the internet by accessing this collection from any device such as laptops or tablets.
In order not to lose the relevance, manufacturers are adopting measures to facilitate consumer access to Flash drives, in order to popularize its use. One of the paths found is to get the device out of the limits of the specialist shops to reach the shelves that include up to bakeries.
"We promote the sale of pen drives in the Gallery of the loaves [bakery located in the sophisticated suburb of Gardens], in São Paulo, and the results were positive," said Carolina Maldonado, Vice President of sales and marketing of Kingston for Latin America. "It is a place where people will often own to encourage impulse buying."
After successful experience, the Kingston decided to take their products to convenience stores of gas stations. The company negotiates agreements to reach 700 outlets in the country this year.
In competitor Sandisk, the approach is similar. "The pen drive cannot be hidden in a corner of the store," said Maiko Paula, Senior Director for Latin America. The company has negotiated with Walmart to change of location of pen drives in the network stores: instead of getting locked in closets, as was until recently, the device is being transferred to points close to the boxes.
With lower prices, new sales points and the most prominent points on the gondolas, the manufacturers hope to strengthen the position of the pen drive to cloud services, which often offer basic packages for free. The consumer only pays if you want increased storage capacity.
In Brazil, these programs are still incipient, but the consumer gives signs that are letting the pen drive in the drawer. According to research firm GfK, sales of pen drives in the country declined by 37% in value in the last year, to $ 216 million, after record growth of 21% in the previous year. By volume, sales dropped 13% in 2012. The GfK audits major retailers, like American stores, but does not take into account the sale in small stationery stores, which together have significant participation in total.
The number of manufacturers has also diminished, shows the survey of GfK. In the first quarter, the number of brands in the country fell 39%, from 51 to 31 vendors. "It's an industry that has been wiping away", said the Director of GfK, Gisela Pougy. "We have no specific consumer research, but everything indicates that the user is choosing to save your files in the cloud or even on the phone, when it comes to music and photos, than in a pen drive, easier to lose."
Carolina Maldonado, of Kingston, said not to believe that the storage in the cloud represents the end of pen drives. "When it comes to financial information, income tax and work presentations, the user usually prefer the pen drive, because there are doubts about the security in the cloud," he said.
The slowdown in the pace of sales of pen drives, compared to other technological accessories, made the French Fnac, owner of a chain of 11 stores in the country, changed the shopping strategy. The company started to invest in products with design appeal: sizes lower than usual and unusual formats, including animals such as penguins and elephants. Sales returned to accelerate this year, with a high of 20% between January and April, compared with the same period last year. In 2012, the increase had been 6%. The 8-gigabyte model represents more than half of sales.
Without abandoning the pen drive, Kingston and Sandisk are beginning to bet on the migration of demand from pen drives to memory cards, tablets and smartphones, which are also part of their portfolios. In Latin America, sales of the pen drive Kingston grew 7.5% in 2012, while the demand for memory cards increased 39%.
The pen drive-created by Israel Dov Moran, and launched 13 years-is not the only data storage product that struggles to maintain its position. According to the Superintendency of the Manaus free zone (Suframa), the production of DVD-R-DVD rewritable-accumulates two consecutive years of decline (between 2010 and 2012, the retreat was of 25%). Surprisingly, the rewritable CD or CD-R, that has less storage capacity, fell 4% in 2012.
In the opinion of Carmo Caparelli, Chief Operating Officer of Videolar, Emtec brand and manufacturer Nipponic, CDs, DVDs and Flash drives, there is room for the growth of portable memory devices for sale in Brazil. "Consumption [these products] is still concentrated in the higher classes," he said. For the Executive, there are restrictions to storage in the cloud in Brazil due to the problems of broadband infrastructure. "It's not enough to have the file in the cloud, to access from anywhere, if the connection fails or is absent," he said.