Memory Cards For Cell Phones Set To SkyrocketMemory Cards For Cell Phones Set To Skyrocket

As cell phones and smartphones become more sophisticated memory cards will become the largest generator of revenue in the cell phone accessory market, according to ABI Research.

In a report titled "Mobile Phone Accessories," the research firm said memory cards from the likes of SanDisk will see a 17% compound annual growth rate in shipments over the years to 2013. These cards will soon grab most of the $58 billion-a-year cell phone accessory industry.

"Of all accessories, memory cards deliver the best revenue return," said analyst Michael Morgan in a statement. "In fact, as production has outstripped demand the market is currently oversupplied, leading to a 60% year-over-year fall in per-megabyte prices. However, the memory capacity of the cards being sold is always increasing, and the resulting higher megabyte volumes more than offset the decline in average selling price."

One of the reasons memory cards will grow in popularity is the increasing focus of multimedia on cell phones and smartphones. The consumer demand is already here, and even once-stodgy BlackBerry smartphones are now fully capable of playing music and video. Additionally, handsets like Samsung's Behold, Innov8, and Sony Ericsson's C905 are upping the ante with the cameras in phones, and that leads to customers needing more storage space.

The research firm said carriers can be a bit squeezed by the growth in this demand for more memory, though. Many mobile operators prefer having all memory out of the box because selling them separately leads to higher margins. But subsidizing the memory cards can lead to long-term revenue growth for the carriers, ABI said.

"Subsidies also mean that many more subscribers will have handset accessories such as memory cards, and will be more likely to use mobile music services or download songs, leading to higher data average revenue per users for operators," Morgan said.