Hard Drives Off Memory Lane

Other potential growth areas include prerecorded Hollywood movies stored on flash memory cards that will be playable on cell phones and other portable devices, and new digital satellite radios that are able to record songs, he says.

But PCs represent perhaps the biggest new opportunity for flash, says Barnetson. Flash drives that can be plugged into server racks will be available from Samsung in the second quarter this year.

And by the third quarter, the company will be shipping hybrid drives -- hard drives that include an integrated flash chip. Such drives would allow computers to stop the spinning of the hard-drive platter, helping save battery life and speed programs, Barnetson says.

But Watkins argued that those advantages won't make up for the serious drawbacks of flash. The sizes it comes in are a fraction of those of hard drives, and flash just can't compete with hard drives in terms of price per gigabit, he says.

Even in notebooks, where, arguably flash's power advantages and speed might come in handy, Watkins sees little threat. "People are storing a lot more [data] on their notebooks," he says. "I don't see a notebook application [for flash]."

Although hard drives have lost ground to flash in MP3 players, the rise of digital content is driving demand for hard drives elsewhere.

Then there's the market for digital-video recorders, which represents the biggest chunk of Seagate's consumer-electronics business.

"They're going to sell a lot of flash devices," Watkins said. But he predicted that "every TV" is going to have a hard drive attached to it.

Watkins says that many of the major flash producers, including Seagate, Toshiba and Hitachi (HIT Quote), are also investing heavily in hard drives.

"There's a lot of hype about flash vs. hard drives," says Watkins. But the two storage media are complementary and likely to grow rapidly, he says.

"The companies that know the most about flash are investing the most in hard drives," Watkins adds.

For the time being, then, this battle may not have a loser.