Strong 2nd Half For Flash-Memory Sales

NEW YORK— The market for flash-memory products will remain robust through the holidays on the strength of two hot-selling product categories, digital still cameras, MP3 players and one dark horse: camera-equipped cellular phones.

Of the top two host devices, “digital still cameras are still the primary application for flash-memory cards,” said Dave Klenske, director of product marketing, Lexar Media.

“While the growth rate of digital cameras has been forecast to slow, sales of memory cards are still strong, with SD having the strongest growth,” said Wes Brewer, retail product marketing VP, SanDisk.

The crop of new, reduced-sized memory cards that cater to cellular phones are still a fraction of the market, and it's an open question whether they will constitute a significant market in the future, Klenske said. “Camera phones have always been 'around the corner' and we're still not at that corner yet,” he added. Of all the reduced sized formats, Memory Stick Duo is the strongest seller thanks to sales of Sony's PSP, Klenske noted.

Of the full-sized cards, SD comprises nearly half of the market on the strength of increased adoption of the small card in a host of devices, Klenske said. Canon's recent shift toward more SD-based models also provided a huge surge.

CompactFlash cards, once the mainstay of the flash-card market, have slowly surrendered ground, even as several new d-SLRs are introduced that accept the format. Even among d-SLRs, CompactFlash is embattled as manufacturers like Pentax are incorporating dual CompactFlash/SD slots or simply dropping CompactFlash altogether in favor of SD to achieve smaller form factors, Klenske said.

As the market has seen an influx of competition, product segmentation has taken on greater importance to prevent the products from becoming a commodity. The market is increasingly segmented not just by capacity and price but speed of operation are increasingly important, though consumers are still largely buying cards based on value, Klenske said.

No rival technologies look to supplant flash's dominance, Brewer said. “Flash continues to be the ideal storage solution for consumer electronics devices because of increasing capacities, decreasing prices, lower power consumption, durability, removability and the small size.”

While hard disk drives have shrunk to sizes that make them potential rivals, flash cards will remain the dominant storage medium of choice for a broad range of portable electronics, Klenske said.

“A hard-disk customer is different than a flash-memory customer,” Klenske said. .