Memory Cards Still Taking Shape

The Shapes of Things to Come

Sony and Matsushita (actually a group formed by Matsushita, Toshiba, and SanDisk) are waging a standards war over the memory card. Sony's weapon is its Memory Stick, which is shaped like a stick of gum, while Matsushita's is the SD Memory Card, shaped more like a stamp.

Both parties are moving aggressively to win converts to their side: in January GM announced that its next-generation "e-vehicle" will be equipped with Sony's Memory Stick. The carmaker explained that users would be able to, for example, download music to the Memory Stick at home and then enjoy it in the e-vehicle. Twenty-seven other companies have also decided to go with the Memory Stick. Meanwhile the Matsushita camp established the SD Association in San Francisco in February. The group will start with 71 member firms, including big names like Microsoft, IBM, EMI, Motorola, Symbian, and Toyota. Members will soon number 100. (Note: both groups say they've collected a lot of "members," but many of the members overlap.)

So far, memory cards have only really caught on in digital still cameras, which explains why the market is a mere ¥25 billion. However, industry observers expect the cards will soon be widely used in a variety of devices and predict the market will hit ¥1 trillion within five years.

The most anticipated application is music distribution, partly because the Memory Stick and the SD card both already feature copyright protection. Sony has already marketed a Memory Stick Walkman, equipped with its Magic Gate Memory Stick (a copyright protection technique the company developed). And this spring the Matsushita Group releases its first SD-card-equipped portable music device.

Of course, there's another device for distributing music being talked about: cell phones. Both camps will participate in demos this spring of music distribution for PHS cell phones. NTT DoCoMo plans to launch commercial-based services for PHS this fall. The carrier is planning to launch similar music-distribution services for other types of cell phones next year. (Users will wear earphones connected to the phone.)

Market watchers are following the memory-card battle closely. Reiji Asakura, an independent audio and visual analyst and author of several books, said the battle is similar to the one between VHS and Beta. "But this time the media itself is not very important," he says. "Rather, applications are important. Sony is good at developing attractive applications, but if the Matsushita Group can attract a great number of companies, then it may have a chance to win." The way Asakura sees things, it's a war between Sony's ability to innovate and Matsushita's ability to make friends.

In the meantime, most companies are sitting on the fence, waiting to join whichever camp wins out.