Carriers Find New Ways To Wall Off Content, This Time Using The Memory Card

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Carriers have found a new way of dangling content in front of consumers, but with all the same strings attached as the original “walled garden.” SanDisk (NSDQ: SNDK), the maker of the microSD memory cards, said today it has successfully demonstrated new technology with the help of LG (SEO: 066570), in which memory cards can come loaded with content but are only playable on approved phones. SanDisk said in a release it “ensures that content preloaded in these cards can only be used in approved handsets and marks the beginning of a new era in mobile phone service and content distribution.”

But the new technology sounds like the old way of doing business…If network operators distribute content on removable memory cards, and then restrict the accessibility of such content to only their subscribers, it’s just like the restrictions of the past. It’s not that it doesn’t make sense — in order to get free stuff from a carrier, customers should have to pay for it by sticking around for awhile. However, it all sounds very rudimentary, especially when you see carriers moving away from restrictions and even big music-players like Apple (NSDQ: AAPL) moving away from DRM. It also seems light year’s away from one of SanDisk’s other big initiatives. SanDisk is also working with music labels, and has convinced all four of the majors to sell its microSD memory cards pre-loaded with DRM-free MP3 music. Release.

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Bob Hamilton

From the SanDisk point of view, the two business cases you mentioned– pre-loaded phone memory and pre-loaded MP3 memory — are hardly "light years away" from one another; they are two, similar, value-added propositions. But you are correct that carriers find it tough to escape their antiquated ways (which are analogous to the electric company requiring everyone using its services to use only the utility's toaster). They have painted themselves into this corner and cannot figure out how to make a buck without resorting to this control-freak model. But it's a desperate, buggy-whip scenario that, ironically, may keep them from controlling the next mobile phone paradigm. But rejoice: this deathwish will only expedite the day of the Internet phone (from Google? Apple? Cisco?), where applications may ride unbridled.

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