If you thought USB sticks were a security risk, allowing corporate data to be stolen or lost, you ain't seen nothing yet. Having perfected 3.5 and 2.5 inch hard disk technology, plus 1.8 inch for some mobile applications, the disk drive makers are now developing high capacity one-inch hard disks.

These already exist in the shape of the Microdrive, developed by IBM and passed to Hitachi Global Storage Technologies (HGST) when Hitachi took over IBM's disk drive operations. This is of course not the 85kB stringy-floppy ZX Microdrive invented by Sir Clive Sinclair's team in the early 1980s, but a hard disk designed to fit inside a CompactFlash card.

The first IBM Microdrive shipped in 1999 and held 340MB, but capacities have now reached 6GB, and Hitachi is promising 10GB drives for later this year. Nor is Hitachi alone now - Seagate and Western Digital have both announced one-inch drives, as have new suppliers Cornice and GS Magicstor.

Where is this capacity going? Today, much of it is in media players, digital cameras and perhaps PDAs, but increasingly it will be in devices that most of us would not think of as holding a hard disk. For example, at CeBIT this year, Samsung showed a smartphone that includes a 3GB one-inch drive from Cornice.

Yes, that's right - phones and PDAs are coming which will be able to download huge chunks of your corporate data. The risk is not just deliberate data theft - you can do that with an iPod. The thing to remember is that these are smart devices capable of running applications, and that means people will want to download data to them as well. A lost or stolen phone could now contain an organisation's entire internal directory, as well as its price-book, customer database, and who knows what else.

HD usage explodes away from IT
Hard disks are going into other consumer electronics too, especially TV set-top boxes and digital video recorders, although most of these use 3.5 inch or 2.5 inch drives, rather than the one-inch and 1.8 inch drives being developed for portable devices.

The hard disk companies see all this as a huge opportunity, says Matt Massengill, Western Digital's chairman and CEO. "The IT market continues to grow but that's not where the heat is. The consumer market is finding ways to use hard drives that it's never done before," he says.

"It's almost all MP3 players for now. Video players are a fairly low volume - the difficulty is the size of video content and getting it onto the player, plus the size of screen - video is not as simple to use as music."

Massengill argues that hard drives and Flash memory don't really compete - he says it is synergistic, with Flash driving the desire for more content and thereby opening the door for hard disks. For MP3 players, he says the choice is based more on the price of the device, with €99 (£70) and under being Flash, while €150 (£100) and over is hard disks.

The next step is to get below the CompactFlash Type II form factor used by most one inch drives today. One way is to use a smaller drive - Toshiba has demonstrated a 0.85 inch hard disk for instance, but one inch drives will get smaller too - as examples, the Cornice SE is specially packaged for use inside consumer devices, and Hitachi has a more compact version of Microdrive which it calls Mikey due out later this year in 8GB and 10GB sizes.

"Mikey is a smaller package - it's a new form factor with 20 percent less volume, but has the same recording area," says Ian Vogelesang, HGST's strategy and planning VP. "It's a single-platter drive aimed at the phone market, but with these things you bring them out for one application and your customers find completely different ones."

For example, the 1.8 inch drive was conceived for PC use in PCMCIA card form, but Vogelesang says most of Hitachi's 1.8 inch Travelstar drives actually went into consumer devices such as MP3 players, a process helped by Hitachi adding a ZIF (zero insertion force) connector that better suited those applications. He adds that with Mikey, this latter step has already been taken - it will use a new standard interface and form factor called CE-ATA, which is specifically designed for embedded storage.

Because they will be embedded rather than on plug-in cards, drives such as these will be pretty much invisible - and therein lies the risk. More and more business and personal data will be on the move in more and more devices. Are you ready for the 3GB phone and the 10GB PDA?