SNDK + MSFT: U3 and Beyond

Expected this May 11 announcement of a U3 etc partnership with MSFT towards the end of last year. Better late than never. To my mind, a positive in the long term for SNDK.

Although personally am not that big a MSFT fan, think MSFT/SNDK for U3 is much better than the alternative of having MSFT aligned with MU (lexar) /Samsung or someone else. For a while there, it looked like that’s the way it would go.

MSFT has long been listed as an associate member of the competing USB-FDA. The USB-FDA is Lexar/Samsung driven. Last spring there was rumor published by DigiTimes that MSFT was coming with its own U3-like platform, maybe with the USB-FDA.

Last fall the winds seemed to have shifted. Don’t know why. Maybe IP. Maybe technology. In any case, by the fall, MSFT and SNDK were rumored to be an item for U3. Daniel Amir of WRH even mentioned the potential of SNDK (FLSH)/ MSFT partnership for U3 in his Nov 16 WRH report.

Now that MSFT/SNDK is official, the USB-FDA might be in real trouble. Time will tell. Suppose if the stakes are deemed high enough, the competition will hang in there. Its going to take significant resources though, and the challenge just got particularly difficult. Most likely the competition will fold and just license from SNDK/MSFT just like they do today for SD cards and Windows, etc.

FWIW my guess is that this announcement was slated for CES. Why we didn’t hear is anyone’s guess. Most likely negotiations on the agreement stalled over the fine print. SNDK is experienced in tough negotiations. Trust they held their own.

The SNDK/MSFT pr talks about expanding and replacing U3 smart technology for USB flash drives and flash memory cards delivering greater mobility, security and integration with Windows. In essence, more and better U3.

Beyond simple evolution, am thinking there are three big angles of interest to MSFT: DVD replacement/software distribution, applications for mobile devices, and SSDs/Virtual Machines. eCommerce is likely mixed in there, too, along with further potential for collaboration between the two companies.

As for DVD replacement/software distribution, it seems like it is only a matter of time before the DVD is replaced by solid state storage. By the second half of next year prices of NAND/3D should have dropped to the point where DVDs and DVD players are just not worth the effort. MSFT seems to be laying the groundwork now for its next generation of software distribution.

Re applications for Mobile Devices: MSFT has been looking for angles on the mobile market for years. No need for MSFT to control the mobile OS or fight the related handset hardware battles when MSFT applications can run on mobile devices right off a U3+ removable card with its own OS. Pretty clever. As Shlomi Cohen pointed out in his recent Globes article, U3+ could be a back door to the mobile market.

Re U3+ enabled SSDs & cards/ Virtual Machines: Although this is futuristic stuff, many think the potential’s worth watching. Agree. In any case, there is a range of possibilities offering many opportunities.

Some smart folks envision U3 style virtualization going much farther than what we have seen so far. Eventually to the point where the PC form factor itself could be threatened. Suspect this agreement with SNDK is at least in part MSFT’s way of trying to manage or co-opt this possibility.

SNDK has hinted strongly that SSDs will evolve from an OEM-centric HDD-like product to a removable consumer card. Suspect these will be ExpressCards with capacities of 32 GBs, 64 GBs and up. If this is the way things go, these SSD cards look ideal for the first PC virtualization cards if specially enabled for U3+.

The U3 concept has the potential to be pushed far beyond a limited PC environment with email, settings and so forth. Managed properly, higher capacity cards have the potential to store a complete functional PC disk image, which in turn can function as a virtual machine. In other words, the PC as we know it, can be virtualized, ultimately doing away with the PC form factor altogether.

As Fujitsu Siemens Computer’s chief technology officer, Dr. Joseph Reger said in 2006: “In four years from now we can expect 30GB on a stick … You could store a (complete) virtual machine image in it. It would be a more advanced idea of the U3 environment… You would carry your complete PC environment around with you on a memory stick…

Virtualisation gives you a separation between the PC and its peripherals and the PC’s ‘state’… If this happens then the software heart of the PC is ripped out. There’s no O/S, at least, no Windows as we know it, no applications. It becomes the hardware shell of a PC with some sort of hypervisor,and it’s embedded in a desk or a flat screen or “some other piece of furniture and used for access.”

MSFT must find the concept of having the software heart of the PC ripped out, particularly disconcerting.

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