Return of the pocket computer
Israel’s M-Systems has sparked a whole new market.
Dubi Ben-Gedalyahu 22 Aug 02 16:07
Only on very rare occasions can the Israeli high-tech industry chalk up to its credit the invention of an entirely new market segment of electronic consumer products. In this case, it’s not just any old market segment, but one that’s racking up dizzying growth in the technology-saturated markets of the Far East and the US. This segment, called “USB-based pocket devices,” includes gadgets the size of the average key chain, which can be hooked up to any stationary or mobile computer, and include memory, communications, and security capabilities.
Success has many parents, but in point of fact, the first finished consumer product of this type, DiskOnKey (DOK), which entered the global market in 1999, was developed and manufactured in Israel by M-Systems Flash Disk Pioneers (Nasdaq: FLSH).
The original product was designed to meet professional’s need for simple storage solutions with a lot of memory in order to store information and transfer it from one computer to another. Diskettes, the most common and accepted solution for this purpose, long ago came to be considered heavy, awkward, and unreliable, fit only for museums. Their limited storage capacity is useless for heavy multimedia files. Another solution, the CDROM, is like using a machine gun to kill flies, as far as stationary computer users, who do not need its huge capacity, are concerned.
The DOK offers a smart solution to the problem. It is equipped with a flash memory chip, which has a large number of writing-erasing cycles, and a sophisticated control chip, which turns the device into a virtual disk. When it is hook up, the computer identifies it for all purposes as an external hard disk. All this is compressed into a miniature package, very light and with no moveable parts whatsoever, and very durable against the typical wear and tear of the stationary environment. The USB interface was chosen to hook up the device, due to its great availability in up-to-date computers, its built-in high rate of data transmission, and its suitability for hooking up external devices automatically and transparently.
Achieving acceptance for the DOK was no simple matter. Users had to be persuaded to adopt completely new habits for stationary transferring of data. They had to accept an initial price of $50 per eight-megabyte (MB) disk. As is usual in such cases, M-Systems began marketing its product cautiously through OEM suppliers and distributors specializing in the institutional and professional market. 18 months ago, however, this small new market began to undergo a rapid, dramatic, and unexpected change, when dozens of competitors from South Korea, Taiwan, and China entered the market with lower prices. The competition sharply reduced prices and hampered the marketing effort, but also exposed thousands of new customers to the products and made them trendy.
In the middle of this storm, M-Systems found itself with a high-end product, whose performance was faster and better than those of its less cheaper competitors. DOK’s use of a separate and sophisticated internal data processor accounts for both its superiority and its higher basic cost.
The need to distinguish its brand from dozens of cheap competing products in the market led the company to change its strategy. The change was first glimpsed at the TechXNY exhibition in late June 2002 in New York, when the second generation DOK was displayed. The external dimensions and the design were identical, but the specifications added another ARM 32-bit processor, and the selection included a model with a 512-MB memory – the equivalent of 355 diskettes. Also displayed was a built-in internal security application. It is now possible to make secure updates of the operating versions of the DOK from a distance through the Internet and the USB plug.
M-Systems CEO Dov Moran calls the new product a platform. He says the combination of a very powerful processor with a large memory capacity and the ability to update from a distance makes the DOK into a kind of miniature computer that can run applications independently. “For the first time, the possibility of updating versions and running applications give major companies in the industry the chance to use DOK to develop new applications and distribute them to their customers,” Moran said. For example, photography giant Fuji Photo Film (Fujifilm), which recently began marketing the DOK on its own label, plans to offer its customers built-in image storage and processing applications.
The rise in the memory capacity of components and their plunging prices will accelerate the use of DOK as platforms for running applications. Units with one gigabyte (GB) of memory are expected to hit the global market as early as next year, with six GBs following a few years later, subject to cost considerations, of course. At the same time, Moran says that the biggest market now is still for components with a relatively modest 32 MBs.
Other areas of technology have been derived from future technological developments of the USB interface used by the DOK to communicate with the outside world. The first, which is already being applied, is the 2.0 standard USB, which guarantees data communications at many times the speed of the current standard. Moran says the company has developed an experimental prototype of a product with the new interface. For now, however, the computer industry’s adoption of this standard is quite slow, and the question of its compatibility has not been sufficiently clarified. In the future, when products with many GBs of memory appear, it can be assumed that the new high-speed device will become a standard.
Another area is the adoption of an “on the go” hookup standard, for accessories and consumer products with a USB interface. This is an extension of the current standard, which will enable devices and accessories to communicate with each other directly through the USB hookup without mediation from a computer. Moran believes the new standard has exceptional potential, and will open a new huge market to the DOK and its accompanying products. From a device for transmitting data between computers, the product is likely to turn into a means of transmitting data between electronic consumer products, such as digital cameras, MP3 players, and so forth.
What is on the horizon? Moran estimates the current rate of exposure to USB-based memory devices among PC users at 10%, but adds that there is still plenty of potential for expansion. Furthermore, Far Eastern manufacturers for the mass market have warmly endorsed the idea of a “key chain with a USB hookup” and are now extending to products with a different purpose than pure data storage, such as miniature wireless modems, miniature audio-video cards, and more. The modular capabilities of the DOK’s high-speed data processor can fit in well in this field. It isn’t hard to imagine a DOK with a modular hookup that can be attached to specialized DOKs with diverse various uses, such as MP3 Bluetooth and the like, as needed. This exciting idea could actually turn the old pocket calculator into a real pocket computer. |
