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SanDisk Buys MusicGremlin

6/12/2008 10:56:00 AM Eastern

Milpitas, Calif. — SanDisk has acquired MusicGremlin, the first company to sell MP3 players that use Wi-Fi to download music directly from an authorized music store.

SanDisk said it would drop the MusicGremlin brand, discontinue sales of MusicGremlin’s Wi-Fi devices and discontinue the MusicGremlin download service, which lets users download music on a purchase and subscription basis via Wi-Fi. SanDisk nonetheless plans to use MusicGremlin technology in future Sansa MP3 players.

In 2006, MusicGremlin launched the industry’s first Wi-Fi-downloading MP3 players, which downloaded purchased and subscription-based music from a MusicGremlin Web site. In 2007, SanDisk launched the Sansa Connect, which uses Wi-Fi to listen to free Internet radio via Yahoo, stream photos from Yahoo’s Flickr photo-sharing site, and download subscription-based music through the Yahoo! Music Unlimited download service. This year, however, Yahoo! is discontinuing its subscription-download service but maintaining its Internet radio service.

 “We’ll be working on a transition plan to give subscribers alternative solutions over the next few months,” a spokeswoman said. “We’ll communicate to subscribers as soon as possible, in advance of the service being discontinued.”

 “MusicGremlin’s digital distribution platform and capabilities will provide SanDisk with adaptive and innovative technology that will play a key role in the development of future Sansa products for consumers,” said Daniel Schreiber, senior VP and GM of SanDisk’s Sansa audio/video business unit. Robert Khedouri, co-CEO and co-founder of MusicGremlin, joins Sansa as services VP.

“SanDisk and MusicGremlin share a core passion for granting consumers easy access to digital content,” said Khedouri. “We’re very pleased that MusicGremlin technologies will soon contribute to a new generation of Sansa products and services. We look forward to joining SanDisk in realizing our vision for the future of distributed media.”

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