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Cell Phone Memory Card 'War' Could Impact iPod Sales

By Gene J. Koprowski MacNewsWorld ECT News Network
Apr 25, 2006 5:00 AM PT

Massive growth in the sale of removable memory cards for cell phones -- about 160 percent last year -- may indicate that the mobile phone will truly emerge as a competitor to the iPod.

Cell Phone Memory Card 'War' Could Impact iPod Sales

The 2 GB MultiMediaCard (MMC) from Samsung could spark the convergence trend for mobile phones, raising the level of competition Apple's iPod battles in the marketplace.

During the last two years, there has been a rapid adoption of small format removable memory cards in cell phones, about 160 percent growth in global slotted phone sales between 2004 and 2005, according to the latest report from the Strategy Analytics Handset Component Technologies service, "MicroSD Dominating Demand in Slotted Phones."

Slotted Phones

Over the next five years, sales of slotted phones -- cell phones with a removable memory card slot -- are projected to grow at an annual average rate of 52 percent, with almost three-quarters of all new phones sold in 2010 likely to include a slot. Sales of memory cards for cell phones, meanwhile, are expected to grow at a rate of 53 percent over the next five years, reaching almost 1.1 billion cards by 2010.

Earlier this month, Samsung Electronics announced a 2 GB memory card for use in mobile phones. The 2 GB MMCmicro card is only .04 inches thick, and capable of storing as much as 12 hours of "mobile video," the company said.

The card is so fast, with a read/write speed of 10/7 megabits per second, a user can download three hours of mobile video in less than two minutes.

"In 2005 the average capacity of memory cards sold for use in cell phones was 112 MB per card," said Stephen Entwistle, vice president of Strategy Analytics, the Boston-based research consultancy. "By 2010 we predict that this will have increased to around 1.6 GB, equivalent to an annual average growth rate of over 70 percent."

Samsung is in competition with SanDisk, which recently announced a 1 GB MicroSD card. Samsung uses a format called MMC, or Multimedia Card, which is different from Sandisk's SD, or Secure Digital, cards.

Format of Choice?

"MicroSD has rapidly become the format of choice for new mobile phone designs, with design wins far exceeding those for MMCmicro and Sony's new micro-sized format, the M2," said Stuart Robinson, director of handset component technologies, at Strategy Analytics. While the M2 will quickly replace the larger Memory Stick formats, it will remain a long way behind the microSD format and some way behind the MMCmicro format in cell phones."

The Samsung card in particular is going to be a threat to Apple's best-selling iPod MP3 player.

The phones should hasten the transition of regular handsets -- in the high-end, the Treo -- from their current status as PDAs-cell phones and turn them into powerful threats with the addition of an MP3 player.

The 2 GB cards can store about 500 songs, and immediately turn any phone into a viable iPod competitor. These Treo-like phones are just as "cool" as iPods too, though that remains to be seen in the marketplace.

Samsung may not be the only one with this iPod challenging capability for long. Intel recently began showing samples of the first 1-gigabit flash memory devices it has built using its advanced 65-nm fabrication process.

These chips aren't add-in cards like Samsung's MMC -- they're the onboard memory soldering onto the cell phone's circuit card, and they can also be used in MP3 players.

Video Features

Taken together, these developments indicate that there's surely a flash-memory capacity move underway that's going to rapidly drive video- and music-file features into the cell phone space.

Last year, worldwide semiconductor revenue were US$235 billion, a 5.7 percent increase from 2004, according to a report by Gartner. Last year's revenue surpassed the semiconductor industry's previous record of $223 billion set in 2000.

"The popularity of MP3 players, however, accounted for dramatic growth among flash memory vendors in 2005," said Richard Gordon, research vice president at Gartner.

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