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IBM cuts price of tiny hard drive

Big Blue reduces the price of its one-inch Microdrive for consumer electronic devices by as much as 32 percent.

IBM on Monday shrunk the price of its smallest hard drive, the Microdrive.

The Microdrive is a one-inch hard drive that acts as removable storage and fits into a CompactFlash Type II slot found in consumer gadgets such as digital cameras, MP3 players and handheld computers.

IBM cut prices by as much as 32 percent. The company lowered the price of its 1GB drive to $379. The 512MB version now costs $259, and the 340MB version is $199. The cuts come as more manufacturers are beginning to support the Microdrive, IBM spokesman Michael Kuptz said.

"As acceptance of Microdrive by both consumers and device makers grows, we're able to continue with dramatic price cuts," Kuptz said. IBM has lowered the cost per megabyte by 50 percent in each of the past two years, he added.

The price moves come amid a battle for market share among memory formats, such as flash memory and hard drives.

Microdrives are more affordable on a per megabyte basis than flash memory formats, such as SmartMedia, Memory Stick, Secure Digital and CompactFlash, said Alan Niebel, an analyst with memory market researcher Web-Feet Research.

Niebel estimates that the cost per megabyte for Microdrive is about 40 cents to consumers, while flash memory is in the range of 50 to 60 cents.

"Flash still has a ways to go before it can catch up with Microdrives on price," Niebel said.

Microdrive price cuts
IBM has dropped the price of its smallest hard drive, which is used in digital cameras and handheld computers.

Capacity Old price New price
  340MB     $299

  512MB     $399

  1GB     $499

Source: IBM

At the same time, the various flash memory formats have the advantage of being smaller than the Microdrive. Flash memory formats also consist of solid-state media, which means, for example, that songs on the cards won't skip during playback if the device is jarred.

At this point, the flash memory market is also much larger than the market for Microdrive. IBM's Microdrive had 6.7 percent of the removable storage market last year, Niebel said.

As demand for the Microdrive grows, Kuptz said, the company will continue to boost the storage capacity and drop prices.

IBM has said the tiny drives can potentially store up to 6GB. Kuptz expects the capacity of current Microdrives to increase 100 percent per year.

"Capacity on Microdrives isn't like capacity on desktop hard drives where people will use as much as they can get," Kuptz said. "This market is more sensitive. We could bring larger capacities, but only if the market wants it."