Flash comes calling on cell phones

The storage devices are leaping ahead in capacity while their price per megabyte remains relatively stable, opening up opportunities for card makers.

Prices of flash memory cards, fixtures in digital cameras and audio players, have been high enough to hamper sales of devices that use them as a means of storage. But that's set to change. Research firm IDC estimates that average memory capacity will increase from about 42MB per card this year to about 83MB in 2006. Price per megabyte will drop from 45 cents this year to 10 cents in 2006.

For the next few years, the removable cards will continue to be used primarily with digital cameras. IDC estimates that digital cameras account for about two-thirds of total shipments of flash memory cards.

"Only 15 percent of U.S. homes have a digital camera, so there is still a lot of room for growth," said Eric Stang, chief executive at card maker Lexar Media. But Stang sees cell phones becoming a big area of opportunity.

Lexar will begin shipping 512MB Secure Digital flash memory cards priced at $399 starting Aug. 1, the company expects to announce Monday. Secure Digital is the latest major format to hit the market, and while it represents a fall in price, it is still among the more expensive of the formats per megabyte.

Following an uncharacteristic year in which price per megabyte for flash memory fell by 75 percent, levels are stabilizing and in the second quarter declined only 8 percent, Stang said.

Calling on memory
Industry insiders expect that in the coming years most shipments of the cards will be for use with cell phones. Demand for memory cards will get a boost over the long term by cell phones that will run on next-generation wireless networks, according to IDC analyst Mario Morales.

"As high-speed networks become available, we'll be moving toward data-centric phones, and they will gradually incorporate advanced features," Morales said.

IDC expects shipments of cards used in cell phones to explode from 600,000 units in 2001 to nearly 150 million units in 2006, vaulting them over digital camera shipments from well behind to well in front. From 2001 to 2006, deliveries of flash memory cards used with digital cameras are expected to grow from 35 million units shipped to nearly 62 million, according to IDC.

There are several potential uses for flash memory cards in cell phones: Phone owners can, for instance, store images for transfer over wireless networks or back up files.

A key issue for cell phone users is security, and the industry is moving to address that area. On Thursday, a group known as the 5C announced the creation of the Mobile Commerce (MC) Extension Specification for flash memory cards, which they hope will encourage cell phone owners to perform transactions over wireless networks.

The specification is intended to keep strangers from capturing sensitive information when it is being transferred wirelessly and to protect data if a consumer loses a card. The specification can be used in all the major flash memory card formats, including CompactFlash, Secure Digital and Memory Stick.

Several phone companies have already announced intentions to use flash memory cards in upcoming phones, including Sony Ericsson in its P800 and NTT DoCoMo in its i-shot mova D25li. Both phones come with built-in digital cameras and use Memory Stick Duo cards.

The formats likely to benefit most from the expected increase in use of flash memory in phones are the smallest of the major formats, Secure Digital and MultiMedia Card, according to IDC. Sony has been promoting Memory Stick Duo, which is about the same size, to serve as a smaller Memory Stick format for use in cell phones and small digital audio players.

Lexar's Secure Digital cards come in capacities of 32MB, 64MB, 128MB and 256MB. The company also sells other card formats, such as Memory Stick, CompactFlash, SmartMedia and MultiMedia Card.