Updated from 5:27 p.m. EST

Flash memory's budding campaign to conquer the PC got a boost Tuesday when Samsung officially debuted a notebook hard drive based entirely on the popular semiconductor technology.

The 32-gigabyte NAND flash drive is designed to replace a laptop's conventional hard-disk drive, bringing benefits such as faster boot-up time and longer battery life.

At a time when some analysts and investors are fretting that overenthusiasm for flash memory is causing manufacturers to produce too many of the chips, Samsung's hard drive offered a hint of the potential for new markets to soak up the increasing supply.

But while flash hard drives offer many advantages, analysts say they're not about to replace conventional hard-disk drives anytime soon.

"Samsung is basically trying to make the market aware of their solid-state disk drive with their announcement, and I think they would expect that that market opportunity is really rather niche at this point," says John Rydning, the hard-disk drive research manager at industry research firm IDC.

The reason is simple: Flash is astronomically more expensive than hard-disk drives.

An 80GB notebook hard drive costs somewhere in the neighborhood of $130; flash memory costs around $50 per gigabyte, according to analysts. At that rate, a 32GB flash drive would cost a whopping $1,600.

Samsung has not yet released any details on pricing for the flash drive. Don Barnetson, the director of flash marketing at Samsung Semiconductor, acknowledged that the price of flash today makes the 32GB drive much more expensive than what the average consumer would be willing to pay.

The 32GB drive is "very much a technology demonstration vehicle," said Barnetson. But 8GB and 16GB versions of the drive could prove particularly attractive to the emerging ultracompact notebook segment, he said.

According to Samsung, its flash hard drive weighs half as much as a comparatively sized hard-disk drive and reads data three times faster. The flash drive also uses only 5% of the electricity needed to power a hard-disk drive.

"There are consumers who don't need a 50GB drive," said Barnetson. "They would rather have a smaller, lighter, less power-hungry drive."

Samsung says it believes the worldwide market for solid-state disk drives will total $4.5 billion by 2010, up from an expected $540 million this year.

NAND flash memory retains data even when a power supply is switched off, making it a popular technology for storing digital music and photographs on new electronic gadgets such as MP3 players, cell phones and digital cameras.

In 2005, flash memory sales surged 19% year over year, to $18.6 billion, according to the Semiconductor Industry Association.

But with Samsung and Hynix Semiconductor planning to increase their flash output, and new competitors such as Intel ( INTC) jumping into the game through a joint venture with Micron Technology ( MU), there have been fears that the market could soon be oversupplied.

In a recent report, IC Insights warned that the market for flash manufacturing equipment could overshoot its capacity requirements in late 2006 or early 2007 .

Of course, the emergence of a brand new application for flash chips, such as in the personal computer, could lessen the impact of any chip oversupply.

Samsung's solid-state hard drive is among several efforts aiming to give flash a foothold in the PC. Samsung is also developing a separate, hybrid hard drive that combines conventional hard-disk technology with a flash chip.

Earlier this month, Intel said the next version of its popular Centrino notebook platform will incorporate flash memory on the PC motherboard as a way to speed up the time it takes to turn the computer on.

Analysts believe the flash drive will initially appeal to specialized customers such as makers of military and industrial equipment that are willing to pay a premium for the benefits of a hard drive with flash technology.

Flash drives are considered less prone to damage than traditional disk drives, which are mechanical devices.

"For some markets, the price difference is actually not that big of a deal," says Dean McCarron, president of PC component research firm Mercury Research. "If you're looking at say, a piece of industrial equipment, where downtime or the maintenance cost would almost immediately wipe out the cost of the disk, it could be a slam-dunk."

How soon flash hard drives will be able to make inroads into mainstream PCs is still unclear however.

"Over time, as the price of flash continues to fall, we can move up into densities and offer much more of a mainstream product to notebook users," said Barnetson.

The flash industry has a history of cutting prices to spur the technology's adoption in new markets.

In January, SanDisk ( SNDK) announced that it would slash prices by up to 30% , in order to entice customers to buy high-capacity flash chips.

This cost-cutting plan, combined with the natural economies of scale that result from producing greater amounts of higher-capacity flash memory, could make the price of a 32GB flash drive less prohibitive.

The problem is that the price of conventional hard-disk drives also continues to come down, giving consumers ever more storage capacity for the same price.

"If hard drives were a stationary target, then it would be very easy to say flash will surpass them," says McCarron. But, he adds, that isn't the case.

With consumers storing increasingly large files on their hard drives, such as video and music, conventional hard drives have an inherent advantage over flash.

Still, McCarron says it's not impossible that flash could gain a toehold in market segments such as corporate notebooks, where storage capacity requirements have not been increasing as rapidly as in consumer systems.

"What will likely happen over time is that a larger class of systems will start fitting into the footprint of flash-disk drives," he says.