Sony adjusts Memory Stick shipment figures up and down

Sony is getting a little more bullish on the future prospects for its Memory Stick removable memory card while adjusting down its shipment figures for the format's first two years on sale.

Until this week the company had said "actual shipments" of Memory Stick media totaled 10 million units by the end of fiscal year 2000, which ended in March 2001. But on Tuesday the Tokyo company revised down its shipment figures for fiscal year 1999 by one-third and said cumulative shipments for the period to the end of March 2001 were actually closer to 9 million units.

"We don't have any solid answer," said Aki Shimazu, a spokeswoman for Sony, when asked to explain the discrepancy. "But the latest (data) is the most accurate information we can provide."

Sony also announced for the first time "actual shipments" to the end of March 2003. It said cumulative shipments of cards totaled 39 million units by that time. That figure is about 10 percent higher than a forecast made in the middle of last year although well below earlier predictions. The earlier predictions, made in March 2001, called for cumulative shipments to total 65 million units by the end of fiscal year 2002. These were revised down last year largely because the use of memory cards in cellular telephone handsets never took off as expected.

When first projections were made for the Memory Stick market the earlier prediction downloading of music via cellular handsets to memory cards was expected to become a major application but that never happened, said Shimazu. "Now its getting more common to take pictures on your phone," she said.

With the launch of megapixel-class cellular telephones, the file size of images taken with the phone has gotten larger and using the cellular network to send the images to a PC has become more expensive. As a result, all of NTT DoCoMo's 505-series cellular telephones, which were launched earlier this year, include memory card slots and Memory Stick Duo is supported by models from Sony and Mitsubishi Electric.

The format is also getting support from Samsung Electronics, which is currently ranked as the No. 3 manufacturer of cellular telephones. The company said recently it is planning its own handset with a Memory Stick slot and it could be on sale before the end of this year.

Looking ahead Sony has revised upwards its predictions for Memory Stick unit shipments. The company's latest forecast says cumulative shipments will reach 75 million cards by the end of March next year. That is 25 percent higher than it was predicting a year earlier although well below its prediction of two years ago. Sony is also predicting 130 million cards will have been shipped by the end of March 2005 and 210 million cards by the end of March 2006.

The unit shipment numbers are higher than predictions made by Kim Soo Kyoum, a semiconductor analyst for IDC, although he agrees that cellular telephones with embedded cameras will become a driver for memory card sales, both for Sony and other companies.

About 60 percent of current sales of cards are for digital cameras and a further 30 percent for PC and peripheral use, including digital music players, according to Sony. The remaining 10 percent encompasses other uses including cellular telephones and Sony thinks this will rise between 20 percent and 25 percent in the future on the back of increased use with cellular handsets, said Shimazu.

"The main jump will come in 2006 and 2007 when we expect 3G applications will become popular," said Kim of increasing use of Memory Stick for cellular telephone related applications.

The increasing use of Memory Stick will push it into number two position in the memory card market, in terms of unit shipments, in the coming years, says IDC's Kim.