SEOUL (Reuters) - A faster, quieter laptop has arrived, with cool, lightweight flash chips where the hot-and-heavy hard drive once sat, but limited capacity and high prices mean the technology is not yet ready for the mass market.

A man installs a laptop on a wall before the opening of the CeBIT computer fair in the German town of Hanover, March 14, 2007. A faster, quieter laptop has arrived, with cool, lightweight flash chips where the hot-and-heavy hard drive once sat, but limited capacity and high prices mean the technology is not yet ready for the mass market. REUTERS/Hannibal Hanschke

It won’t take too long. Prices of flash memory, used currently in cameras, phones and iPods, are falling by half each year and analysts expect around 20 percent of new laptops to be running on flash drives by 2010.

Fujitsu Ltd has begun selling a 32 GB flash-drive laptop to corporate users willing to pay $1,399 extra, and there is speculation that Apple Inc. and Sony Corp. will be next to launch machines with solid-state drives (SSDs), as they are known in the sector.

“Once the SSD wave is launched, the pace of change could be extremely fast,” said An Sung-ho, a Hannuri Securities analyst.

That would bring a welcome new boost to flash memory chip makers such as Hynix Semiconductor, Samsung Electronics Co. Ltd. and Toshiba Corp, analysts say, who are always looking for new markets they can make money in before others catch up and prices slide.

“Chip makers will be the key beneficiary,” An said. “Card makers like SanDisk have also invested in this and should be able to get a piece in the growing market.”

For consumers, flash drives promise laptops that are lighter, faster and won’t burn their knees.

Flash drives are half the weight of hard disks. With no moving parts, they are more sturdy and they can process data much faster, while the lack of a noisy motor or spinning disk means they consume less than half the power and generate less heat.

READY AND WAITING

Tech-savvy university student Shin Dong-hoon, in Seoul, has bought a new LG laptop computer for 2.4 million won ($2,600) but he is already frustrated with it.

The battery -- working hard to keep the hard disk whirring -- can not last a day of class note-taking, report writing, Internet browsing and emailing.

“The hard disk consumes too much power and it’s too heavy,” Shin complained, adding he would have been willing to pay an extra $200 for a flash drive model, although that is still well short of the current cost.

Sentiments like that offer a less-than-rosy outlook for hard disk makers such as Seagate Technology

Analysts say hard disks will be around for a long time and they are still around one-eighth of the price of an equivalent flash drive, but they say falling flash prices could lead to a damaging price war.

Similarly, any extra margin PC makers enjoy from the new product will be limited as they will have to buy in the technology from specialist flash chip makers.

The first generation of flash drive laptop buyers are likely to be heavy-duty users in the military or on construction sites, where laptops face bumps, drops and vibration, companies say.

COST, CAPACITY

Fujitsu’s 32 GB flash drive LifeBook model is on offer to U.S. corporate customers but, at something approaching double the price of a hard-disk model, it is not yet ready for everyone.

“The price gap is still there,” said Michael Wang, the president of Quanta Computer Inc., the world’s biggest contract maker of laptops. “I don’t see it going mainstream in the next three years.”

Storage capacity is another issue, as 128 GB is the maximum flash drive capacity currently available, making it hard to compete with hard drives for desktop computers.

But analysts say these problems may be solved sooner than the industry thinks. By 2010, 32 million new laptops a year could be powered by flash drives, up from just 4 million now, research firm Gartner said in a recent report.

By then, it forecasts, one in six laptops sold to business customers will use a flash drive instead of a hard disk drive, despite reduced storage space.

Others say flash drives could account for a fifth of all laptop sales by then but Nam Kim, principal analyst at research firm iSuppli, says such forecasts may understate the progress of NAND flash drives.

“By the end of 2008, flash memory prices could become very competitive for PC makers,” he said.

Apple, which changed the way the world listens to music with its iPods and is a big user of flash memory, may crack the mass market first.

It may launch a flash-based sub-notebook the size of a paper-back book later this year, research house American Technology Research says.

Another stepping stone could be drives with both an old-fashioned hard disk and a flash new one.

Samsung sells a notebook with such a hybrid drive for $1,900 in South Korea, about $400 more than a previous hard-disk model with similar power.

Of course, if price is no object, almost anything is possible. UK luxury firm Luvaglio reportedly offers a 128 GB flash-based laptop for the modest sum of $1 million, complete with diamond-encrusted power switch.

(Additional reporting by Mayumi Negishi in Tokyo and Sheena Lee in Taipei)