Sony makes gains with Memory Stick

The Memory Stick, which launched three years ago to a tepid reception, is gaining market share from CompactFlash and Smart Media
Written by Richard Shim, Contributor

Sony, which has been trying to grab the flash-memory market for nearly three years, is finally making some progress.

The consumer electronics giant initially introduced the Memory Stick removable flash-memory card to a lukewarm response in fall 1998. But lately, Memory Stick has been grabbing a larger share of the flash-memory market.

Recent figures from market researcher NPD Intelect show that US market share for competing technologies CompactFlash and Smart Media have been declining, while Memory Stick's share has been increasing.

In spring 2000, CompactFlash held a commanding 51 percent of the market. Smart Media controlled 41 percent of the market. Memory Stick trailed far behind with 7 percent.

A year later, CompactFlash has dropped to 40 percent market share and Smart Media has fallen to 32 percent. Meanwhile, Memory Stick has shot up to 25 percent.

Recently announced licensing deals with Fujitsu and Lexar Media, a change in attitude toward developers, and support from a handful of device manufacturers are helping to better establish the media after a "pretty bearish" initial response from industry watchers such as Gartner analyst Ben Thompson.

"Sony was totally in control of Memory Stick's development, which didn't make it the most popular format in the developer community," Thompson said. "But about a year ago, they realized they couldn't proceed that way and get the diversity of products they needed to grow Memory Stick, so they've loosened up on royalties and are listening to developers more."

Fujitsu recently announced it will manufacture Memory Sticks, and Lexar-branded Memory Sticks are also on the way. Licensees will have to pay a one-time licensing fee but no royalties, according to Sony.

Total shipments of Memory Stick cards -- which look like sticks of gum -- are expected to hit 10 million units by the end of the month from 157 licensees, according to NPD Intelect.

"After the recent rapid and aggressive development of Memory Stick, the time is now right for the development community to bring out products," Sony spokeswoman Dulcie Neiman said.

Although the recent interest in Memory Stick has been impressive, Thompson said, the final verdict is still out.

"One-hundred-and-fifty-seven licensees is a good list, but not everyone that signs up is necessarily going to bring something to market. We'll soon be able to distinguish between those that are hedging their bets vs. those that are truly interested in bringing products to market," he said.

Lexar, a developer of digital photography products, sells CompactFlash, Smart Media and Memory Stick formats. The company's spokeswoman, Lisa Kovner, said the appeal of Memory Stick is that while it is widely used for digital photography it can also be used in other markets such as audio and printing.

"People are waiting to see which media technology is going to win, and what we are seeing is that Memory Stick has been gaining share while the share of CompactFlash and Smart Media has been declining. We're seeing a broader use of Memory Stick other than just the digital photography market," Kovner said.

Sony has been pushing the Memory Stick in its own line of consumer products, including digital cameras, digital-audio players and the Clie handheld computer. But recently the flash-memory format has been receiving increased support from other manufacturers.

Motorola announced last week that its future Dragonball processors will support the Memory Stick. Dragonball processors are found in about 75 percent of all handhelds.

Device manufacturers are also incorporating the format. In Japan, Sharp is selling an MP3 player that uses Memory Stick, and car-audio maker Alpine is shipping in-dash players with a Memory Stick slot. Epson has printers on the market in the United States that support the Memory Stick, allowing consumers to save documents onto the format and print them by simply placing it in a slot on a printer.

Meanwhile, Sony is working to improve the format. Sony has created a plan for future Memory Sticks that will cater to developer interest in larger capacities, higher data transfer speeds and lower costs per bit.

Currently, Sony sells 8MB to 128MB Memory Sticks that range in price from £20 to £150. Next year, the company expects to release a 256MB version, followed by 1GB and 2GB versions by 2003. Sony also plans to boost data transfer rates from the current 2.5MB per second to 20MB per second by 2003.

And by next year, Sony plans to expand Memory Stick to include versions that act as GPS (Global Positioning System) receivers and digital cameras.

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