BUSINESSWEEK ONLINE : MAY 29, 2000 ISSUE
INTERNATIONAL -- INT'L COVER STORY These Wristbands Will Keep You Humming (int'l edition) Just when you've finally come to grips with the difference between a Walkman, a Discman, and a minidisk player, the confusion is about to begin again. There's a headband player, something called a Memory Stick Walkman, and, coming soon, a Wristman. What these gadgets have in common is a new format for the portable playback of downloaded tunes. Japanese manufacturers, which aim to dominate the market in mobile-digital devices, are betting on a tiny, removable, flash-memory card. Currently, the card stores downloaded music. Later, manufacturers hope it will be the standard for video and other forms of entertainment. ''This will be a huge business, as big as DVD for my company,'' predicts Sakon Nagasaki, director of the AV media distribution division of the Osaka-based Matsushita Electric Industrial Co. It's still early, but global sales of these memory cards, including the existing credit-card-size type used with laptop PCs and digital cameras, are expected to surge to $1.5 billion this year--double last year's numbers. Matsushita predicts that in four years, sales could reach $4.8 billion. SLEEK GADGETS. The appeal of these cards is more than ease of recording. Flash memory is a solid-state device requiring no bulky mechanisms. So Japanese electronics makers, which have developed the world's smallest, sleekest digital gadgets, will be able to manufacture devices that are ever more tiny and light. Toshiba and Matsushita, in league with SunDisk of the U.S., have developed the postage-stamp-size Secure Digital (SD) Card. In the coming weeks, they'll market audio players--in the shapes of wristbands and pendants--that are compatible with various audio formats. They have also developed mobile phones outfitted with the SD card, which connect with the Web to record and play online music. ''We're very excited by this market's potential,'' says Wes Brewer, SunDisk's director of strategic marketing. He predicts a market of 10 million to 15 million cards in the next few years. But Sony Corp. hopes to grab much of that market for its rival Memory Stick, a storage device the size of a stick of chewing gum. Late last year, it launched a Memory Stick Walkman that plays copy-protected online music. But with the next battle shaping up over even smaller recorders, Sony unveiled, in mid-April, the Memory Stick Duo, a miniature version for use with wristband and headband players to be released later this year. Next year, Sony plans to sell portable devices capable of surfing the Web and handling streaming video and audio. More than 40 companies, including Compaq, Acer, and Samsung Electronics, have applied to license its Memory Stick device. As the battle heats up in Japan--the test ground for anything hot, portable, and digital--Japanese consumers can expect to be bombarded with a variety of products. The most exciting one, though, won't appear until this time next year, when Japanese cell phones will begin to mutate into sophisticated audio and video recorders, thanks to the introduction of a new broadband cell-phone service. For all that flash-memory cards have going for them--they are compact, consume little energy, and retain data even when turned off--they're far from perfect. A major drawback is price: A memory card with a capacity of 64 megabytes, enough to record one hour of music, retails for around $190. And recording to flash memory can be tedious--about 16 minutes per audio track. Many of these problems should be resolved in a year or two. ''We're now working on developing faster cards with a memory of 1 gigabyte,'' says Yoshisuke Kuroda, a Sony engineer. Then consumers will have the equivalent of a truckload of CDs, tapes, or minidisks sitting in the palm of their hand. By Irene M. Kunii in Tokyo _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS Download This! (int'l edition) INT'L COVER IMAGE: Download This! TABLE: The Artists TABLE: The Labels CHART: Although Music Is a Slow-Growth Business... TABLE: Radio CHART: For Now, Web Rivals Shouldn't Slow Radio TABLE: The Retailers CHART: Retail: Still King but for How Long? TABLE: The Consumer TABLE: The Web The Digital Revolution Will Not Be Criminalized (int'l edition) These Wristbands Will Keep You Humming (int'l edition) Napster's Shawn Fanning: The Teen Who Woke Up Web Music Forget Napster. Net File-Swapping Now Goes Way Beyond Music INTERACT E-Mail to Business Week Online

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