As capacity goes up and price comes down, USB storage may just be the technology that brings about the demise of that most tenacious of legacy components — the floppy drive.
The USB drive is tiny and plugs into any PC with a USB port. It also leaves floppy discs for dead in the capacity department: 16MB is considered low-end!
While the devices can hardly be called new — they have been available on the Australian market for well over two years — price drops, driverless installation and a raft of new offerings from vendors are driving the uptake of the technology. The consensus in the channel is there is still a way to go before sales hit their peak.
“I still think the product has a lot of legs,” said Scott Dillon, Iomega’s senior manager for Australia and New Zealand. “And it has obvious links with the notebook. Many vendors want to get rid of the floppy drive and resellers can easily bundle this product as part of a sale.”
Iomega is a relative newcomer to USB storage, launching its Mini USB Drive in Australia late last year. The vendor’s entry is a sign that the technology is gaining momentum, thanks largely to the efforts of distributors such as Oz Entrepreneur which began distributing the Trek Thumbdrive two years ago.
“It was a while before the product really took off,” Oz Entrepreneur director, Rick Kwok, said. “The first 12 months were hard yakka in terms of educating the market – I would say 95 per cent of the people we talked to had never heard of the device.”
Surprisingly, resellers preferred consumers to drive the market, rather than trying to push business through to their customers.
“I would say March 2002 was the turning point – we starting to see movement from the early adopters into the mainstream,” Kwok said. “But the product has definitely moved into the mainstream now.”
While the USB storage has just begun to move onto consumer’s radars, the education market has provided the real opportunities for the products.
“Most of our business is with the education sector, and also from corporates,” Kwok said. “From a retail point of view, it will probably be another 12 months before it is really humming.”
Sales and marketing director for USBDrive Australia, Mark Winter, said sales of the devices had intensified in the last 12 months.
“We’ve seen sales increase rapidly,” he said. “It’s a combination of price, and because people have become more aware of the product.”
USBDrive Australia is already offering the mammoth 2GB drives that were showcased in Las Vegas in November. The product sells for $1700, but at the other end of the spectrum USBDrive’s 16MB device retails for just $79. The products sell through resellers that specialise in vertical markets and through retailers such as Dick Smith Electronics.
Devices that incorporate security features are popular in the corporate sector. Oz Entrepreneur’s latest product features a biometric scanner. Additionally, the ability to secure intellectual property has become a compelling reason to buy. One systems integrator in Victoria is using the Thumbdrive to deploy its software applications to the dairy industry.
“The users have to lease the software and hardware, but how do you protect your software in that case?” Kwok explained. “But with the Thumbdrive Secure, you can code your application around it to make it hackproof. That’s a separate market all by itself.”
The distributor has also experienced strong demand for its standard 256MB product where its resellers have had considerable success selling into TAFE institutions. But it is the mid-range products that are really doing the volume.
“The 32 and 64MB capacities account for more than 50 per cent of our volume sales,” Kwok said.
Iomega’s Dillon said the stellar rise of digital photography as a phenomenon would continue to push sales of portable storage.
“The size of files are just exploding,” he said. “People just want to store more stuff.”
That’s not to say the technology doesn’t face its challenges. At this stage the number of vendors offering the devices would seem to outstrip demand from customers, making it difficult to differentiate the offerings in the market.
There are also concerns as to the quality of the flash memory used in the products and the impact that it has on form factor.
Iomega hopes customers will identify with its brand in their decision to buy the product.
“We are not going to try and compete with the no-name brands,” he said. “[Our product] is not the cheapest on the market, but we are price competitive with the other big names.”
USBDrive Australia’s Mark Winter said both the product range and its reliability influenced customers.
“We have a product for everyone,” he said.