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March of the mini music drives

New portable music players that mimic the iPod are expected to hit the market soon, as a result of manufacturers churning out tiny hard drives.

Look out, iPod.

Apple Computer's popular, portable music player is expected to face increasing competition, as more manufacturers adopt mini hard drives for music players.

Later this month, Dell is expected to include a 1.8-inch hard drive in its Dell Digital Jukebox portable MP3 player. That would essentially match the size of an iPod's hard drive. Meanwhile, Samsung and others are promoting players with a still-smaller drive from start-up company Cornice.

The push toward miniaturization is possible because more companies are getting into the small-drive business. Toshiba was the first major manufacturer of these drives, and Apple was able to obtain the bulk of the drives Toshiba produced.

Drive maker Hitachi Global Storage Technologies recently entered the fray. Hitachi has shipped 1.8-inch drives for an MP3 player made by Rio, and its 1-inch Microdrive is an option in MP3 devices other companies offer. A Hitachi spokesman said the company plans to announce next Tuesday that a music player made by a "household name" is using Hitachi drives with a 1.8-inch diameter. The spokesman declined to specify the customer.

Cornice also hopes its drives will rock the music-player market. Cornice has launched a 1-inch drive, which is being used in MP3 players from Rio and RCA. The drive is also part of a Samsung product that acts as a digital camcorder, digital still camera and MP3 player. The Samsung gadget is expected to be released next year.

A 1.8-inch hard drive has a 40GB capacity, which can translate into more than 650 hours of music. Cornice's 1-inch drive holds 1.5GB of data, about 26 hours of music, according to the company. A portable music player that uses flash memory rather than a hard drive can be more compact but will hold less data.

"In a number of months, we're going to be announcing more MP3 customers," Cornice spokesman Phil Gomes said. Gomes declined to specify how many of its drives have shipped so far, but he said Cornice's main manufacturing partner is very busy churning out the drives. "The factories are running full-out right now in Asia," Gomes said. "Demand has been very high."

Consumer electronics giant Sony said it is looking at the possibility of hard drive-based music players but that it has no plans to come out with one for the foreseeable future. Instead, the Japanese giant will concentrate for now on portable music devices that depend on minidiscs, flash memory or CDs, a Sony representative said.

Interest in hard drives for portable music players comes amid growing demand for disk drives in relatively new consumer applications such as personal video recorders. A burgeoning consumer electronics market for hard drives is one reason the hard-drive industry is enjoying a sunny outlook.

Research firm IDC expects the number of hard drives shipped in portable MP3 players to hit 1.8 million this year, up from 900,000 last year. In 2004, it expects the number to climb to 2.4 million.

IDC analyst Dave Reinsel said Toshiba, Hitachi and Cornice could find the personal music player arena more crowded still. "I certainly could imagine a Seagate" introducing a drive for the market, Reinsel said.

Although the music player market for hard drives is growing rapidly, it is a small fraction of the overall hard drive industry. IDC expects a total of more than 250 million hard drives to be shipped this year.

Rob Enderle, principal analyst with research firm the Enderle Group, said the Cornice product combines a relatively low cost with low power usage and robustness--meaning that the drive can survive a fair amount of physical abuse.

On the other hand, Cornice is competing with established manufacturers that offer products with more capacity. In addition, Hitachi is planning to release an upgraded 1-inch drive soon. That drive is now being tested by MP3 makers and holds 4GB, or 75 hours, of high-quality digital music, according to Hitachi. Hitachi has been selling a 1-inch drive with 1GB.

Dell and other manufacturers will also have to contend with the intangibles of the consumer electronics market. Style and design are big in that market. Apple has historically shown that it has a knack for design, something for which Dell is not known. Apple has also persuaded companies to build add-on devices, such as microphones, for the iPod.

Hard drives are one method of providing storage in portable music players. Flash memory, which involves holding data on silicon chips, is another. But flash memory is more expensive than hard drives on a per-megabyte basis, Enderle said. Although flash memory costs are declining, Enderle doesn't expect the price per megabyte to reach that of hard drives "for another three to five years--if then."

CNET's Michael Kanellos and John G. Spooner contributed to this report.