Apparently it’s the mini, not the meek, that shall inherit the Earth.
Everything is going small and portable, from video-game machines to music players to mobile phones. The latest to fall into this Lilliputian way of thinking is the removable memory card industry, which is shrinking card specifications to miniscule, handset-friendly sizes. These new emaciated cards can be hard to manipulate without tweezers, but could represent significant opportunities.
“The trend toward using memory cards in mobile phones will be a boon for card makers and for content providers,” wrote Mark DeVoss with research and consulting firm iSuppli Corp. in a recent note.
There are three main kinds of memory cards for mobile phones: SD, MMC and Memory Stick cards. The SD Card Association and the MMC Association each recently approved new mini size specifications aimed at the mobile-phone market. The new “micro” sizes for SD and MMC cards are a third the size of standard stamp-sized MMC and SD cards-roughly the area of the head of a pen or a pinky fingernail. Unlike standard card sizes, these micro memory cards fit more snugly inside mobile phones and let users easily store and remove digital content like pictures, music and applications.
“The proliferation of smaller formats in recent months will slow down,” said Stuart Robinson with research and consulting firm Strategy Analytics. “There is currently no need for cards physically smaller than the MicroSD or MMCmicro formats.”
Removable memory cards were first introduced in the late 1990s, mainly for digital cameras. The postage stamp-sized cards allowed photographers to snap hundreds of pictures without having to unload their images into laptop computers. As the consumer electronics industry flourished, more and more gadgets shipped with slots for memory cards.
Memory cards work on Flash digital storage technology. Flash memory, made by companies like Samsung Electronics Co. Ltd. and Toshiba Corp., is relatively inexpensive and does not require moving parts. With technological advances and falling Flash prices, memory cards can store multiple gigabytes worth of information.
One of the fastest-growing markets for memory-card vendors is mobile phones. Once the purview of high-powered smart phones, memory-card slots are common today on mid-tier feature phones, those with integrated digital cameras or music players. With predictions of phone sales hitting 800 million units next year, the opportunity for memory cards is significant.
However, memory cards bring with them concerns for carriers, content providers and handset makers.
“The idea of mobile phones being used purely as playback devices, running content downloaded using another piece of electronic equipment rather than using the handset itself, has been one of the major obstacles in the way of their greater adoption of removable memory card slots,” said iSuppli’s DeVoss. “Service providers did not see a clear path to making the download a billable event over their networks and were unwilling to subsidize the design-in costs of adding such slots in 2G and 2.5G handsets.”
Indeed, some have said the failure of Nokia Corp.’s N-Gage mobile phone/video game device was partly due to its support for removable memory cards. N-Gage games are sold on MMC cards at retail outlets-essentially cutting out the carrier from the gaming business model. Further, Rok Productions Ltd. in the United Kingdom is selling TV shows, movies and music videos on removable memory cards, which users can plug into their mobile phones and watch. Industry watchers predict a future when mobile-phone users will record their favorite TV programs onto memory cards and then watch them on their handsets.
Part of the concern around removable memory cards centers on digital rights management. Those in the industry are concerned that users will be able to spread copyrighted content through such cards. However, industry players have worked to address those concerns by installing DRM technologies on the cards themselves, preventing that content from moving beyond a user’s phone. For instance, Sony Corp. has instituted MagicGate DRM technology on its Memory Sticks, and memory card maker SanDisk Corp. announced a partnership with NDS Group plc for similar technology.
Thus, wireless carriers and others in the industry appear to be bowing to the overwhelming opportunity that memory cards present. According to iSuppli, memory-card shipments for mobile phones will grow from 39 million last year to 600 million in 2009. Strategy Analytics offers a similar forecast: 43 million last year to 507 million in 2010.
“Mobile-phone makers and service providers now believe it is important to become part of the digital convergence process spurred by memory-card adoption,” DeVoss wrote. “This consideration has grown more important than concerns over loss of revenue from their network-based downloads.”
However, all is not rosy in the memory-card market. Nokia supports the MMC standard while Sony Ericsson Mobile Communications L.P. leans toward Memory Stick cards because of its parent Sony Corp. Meanwhile Motorola Inc., Samsung and others support the SD standard. “We expect the shift toward SD card formats in recent quarters to continue,” said Stephen Entwistle with Strategy Analytics. “MMC formats, while offering excellent performance characteristics, are supported by only a handful of cell phone and digital camera manufacturers.”
iSuppli predicts SD cards will account for 55 percent of memory card shipments in 2009.
