SAN JOSE, Calif. – Bill Healy held the future in his pocket.
The senior vice president of Hitachi Global Storage Technologies Inc. whipped out a tiny hard drive about the size of a Wheat Thin. The drive's label claimed a capacity of 1,000 gigabytes — more than 100 times greater than today's models, which can hold 8,000 photos or 2,000 songs.
It wasn't real. But at the rate storage technology is now moving, it's only a matter of time before Healy's mock 1-terabyte disk drive becomes a reality.
With pioneering products like TiVo Inc.'s (TIVO) digital video recorders and Apple Computer Inc.'s (AAPL) iPod music players, the unsung storage components of hard disk drives and flash memory are taking on more visible roles.
These are the keepers of precious personal cargo — from photos and household finances to music collections and favorite TV shows.
"You're letting us into your heart now, not just your home," said Bill Watkins, chief executive of Seagate Technology LLC (STX), the world's largest maker of hard drives.
The opportunity hasn't been lost on storage purveyors.
Top suppliers — like Seagate, Western Digital Inc. (WDC) and Hitachi (HIT) for hard drives, and Samsung Electronics Co. and Toshiba Corp. for both flash memory and hard drives — are consistently pushing the technological envelope to feed device makers with ever beefier and more reliable technology.
Consider Apple's original iPod, which started in 2001 with a 5-gigabyte hard drive. Today, Apple has models ranging from the pencil-thin iPod Nano that holds up to 4 gigabytes using flash memory, to a video-capable iPod holding up to 60 gigabytes on a hard drive.
Flash memory makers have been doubling capacities about every nine months, says Celeste Crystal, an analyst at market researcher IDC. They're squeezing more bits of data onto cells in their silicon chips as well as developing new ways to stack layers of cells in the same amount of space.
The capacities of hard drives, which use spinning magnetized disks, have been doubling nearly each year.
After decades of cramming more and more bits of data closer together, physical limitations are kicking in, so now the industry is switching to so-called perpendicular recording. By flipping the bits of information to stand vertically rather than horizontally, hard drive capacities are again on track to keep expanding.
As a result, consumers are closer than they've ever been to seeing a terabyte of storage in the 3.5-inch hard disk drives found in mainstream home computers.
Later this year, consumers will see PCs and backup-storage devices with 750-gigabyte hard drives — a 50 percent increase from the previous industry maximum of 500 gigabytes and many times greater than the multi-megabyte drives of the 1980s.
Three-quarters of a terabyte will let consumers store roughly 375 hours of standard TV programming, about 75 hours of high-definition video, more than a half million photos, or more than 10,000 music CDs converted into the MP3 digital audio format.
By the end of 2007, PCs will have 1-terabyte drives while notebook computers will sport 200-gigabyte drives, suppliers said.
The competing storage medium, flash memory, holds data in tinier packages than hard drives, though at smaller capacities.
Flash chips, unlike hard drives, have no moving parts, making them particularly rugged and versatile. It's why people can now tote around reams of documents on USB keychains or work out to their favorite tunes on gizmos as light as a stick of Chapstick.
Continued advances will mean portable gadgets will be able to carry 32 gigabytes of data on fingernail-sized flash memory cards within five years, predicts Eli Harari, chief executive of SanDisk Corp. (SNDK), the world's largest supplier of flash memory storage cards.
Both industries are on a tear.
The hard drive industry hit a record $27.9 billion in worldwide sales in 2005, and IDC predicts record shipments will continue annually, ballooning to $41.5 billion in 2010.
Flash industry sales are expected to jump to $18.7 billion in 2010, up from a record $10.6 billion in 2005, IDC forecasts.
"Storage growth is phenomenal," said IDC analyst John Rydning.
Though flash memory and hard drives will compete for business in some overlapping product segments — cell phones, portable media players and ultracompact laptops — analysts say both are poised to dominate their respective markets.
Hard drives, with their monster capacities, are expected to become increasingly vital components in all kinds of consumer gear — not just computers. They're also expanding into game consoles, car navigation systems, digital video recorders and camcorders.
And Watkins eyes the kingpin of consumer electronics: "Every TV will have a hard drive on it, in it, near it," he said, adding that storage demands will only be driven higher as consumers download more video games, TV shows, movies and other media.
Meanwhile, flash memory is expected to expand beyond its current staples of digital cameras, portable music players and keychain drives. Flash memory suppliers are bullish on how the portability and battery-life advantages of their technology will give consumers access to media wherever they want.
Harari eyes the mother lode in the mobile arena: "There are a billion consumers coming on stream for cell phones that will be your TV, personal computer, personal communicator and entertainment device. That's our huge opportunity."
For both industries, thriving sales in consumer electronics have been key in boosting company profits even as they invested in research and development and cut per-gigabyte prices.
Seagate saw its fiscal 2005 earnings rise to $707 million on revenue of $7.5 billion, up from $529 million in income on sales of $6.22 billion the year before. SanDisk earned $386.4 million in 2005, on sales of $2.31 billion, up from $272 million on sales of $1.78 billion a year earlier.
Because the industry has continually reduced prices, Hitachi's Healy promises consumers won't have to break the bank to satisfy their storage needs.
"This is the vision of the future," Healy said, holding the mock 1-inch, 1-terabyte hard drive. It might take 20 years to get there, he said, "but it won't cost you anymore than it would today."
That would roughly mean a retail price of $150, but instead of getting 8 gigabytes of storage, you would get 1,000.