Yesterday I made my case for the handheld mobil device marketplace, and why strong growth there could well point to some profitable stock plays within that sector in 2008.
Today, I'll focus on another potential success story -- removable memory cards. Full disclosure: About all I know about removable memory is in the card I have for my digital camera. But it's a beautiful thing. I pop in the card to take pictures, pop it out and plug the card into my laptop and, voila, I have a great selection of photos to download, print out or email to family and friends.
So for consumers, removable cards offer that Holy Grail of the consumer experience -- ease of use in a quality product.
For investors, the Grail is a bit different. In that case, it's the shoppers themselves. From what I'm seeing, there are plenty of them in the memory card market.
Accoridng to research from ABI Research, revenue from shipments of removable memory cards for handsets is expected to be over $7 billion in 2007, compared with $5 billion expected from headset shipments including both Bluetooth and wired headsets. ABI adds that memory cards will continue to be the highest revenue-generating mobile phone accessory category over the next five years.
ABI Research industry analyst Shailendra Pandey notes that, “With few exceptions, memory cards for handsets are bought by users separately from the handset purchase, whereas an increasing number of headsets are now being supplied inbox with the handsets.”
“Earlier handset vendors only provided wired headsets, but now even Bluetooth headsets are being presented inbox with the handsets. Therefore, greater aftermarket sales of memory cards versus increasing inbox sales for headsets are resulting in stronger growth and higher revenue from memory cards when compared with headsets.”
Memory cards are becoming standardized, as well, and that can only help. ABI says that
a recent accord by Nokia, Samsung, Sony Ericsson, Spansion, STMicroelectronics, Micron Technology, and Texas Instruments will support the creation of the UFS (Universal Flash Storage) specification for use in mobile phones, digital cameras, and other CE devices. That should really trigger even further growth in the memory card market. The UFS standard, expected to be finalized in 2009, will provide a unified memory solution for embedded memory and removable memory cards — eliminating the need to have adaptors for different memory card formats.
Overall, ABI Research expects the market for mobile phone accessories to grow steadily in the next five years, generating over $80 billion in revenue in 2012. As more consumers look to personalize their handsets -- the most important technology they'll own over the next few years -- memory card growth could be off the charts.