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Booming market seen for USB drives

Researchers predict the market for USB flash storage devices to grow rapidly over the new few years, reaching $3.8 billion in revenue by 2006.

The market for flash memory-based USB storage devices is expected to grow rapidly over the new few years, reaching $3.8 billion in revenue by 2006, according to a report released Monday by Semico Research.

Sold under names such as DiskOnKey and Dell Computer's Memory Key, the

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drives are keychain-size devices that plug in to a PC's USB (universal serial bus) port and typically hold 16MB or 32MB of data. Small, portable and relatively inexpensive, the devices have become an increasingly popular replacement for floppy diskettes for transferring files between PCs.

Semico expects the market for such devices to grow at least 130 percent annually, from 10 million units and $100 million in revenue this year to 50 million units and $3.8 billion in revenue by 2006.

That's despite the proliferation of recordable CD drives, which use media with more space and much lower prices, noted Jim Handy, a Semico analyst.

"Something that puzzles me is why the CD-Rs aren't more popular than they are," he said. "It's hard to rationalize...A lot of it is the cool factor. (USB drives) are a whole lot neater to have around than a little CD."

Handy said USB drives should provide a major boost to NAND, a new, lower-cost version of flash memory that can store data but can't execute software instructions.

"NAND give you a cheaper price for just doing data storage," he said. "NAND is really just starting, and something like this could really push it forward."

Handy expects prices for USB drives to be around $15, with the amount of storage available at that price gradually increasing from 16MB to 32MB or more.