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Iomega to Provide Storage for Rio MP3 Players

NEW YORK (Reuters) - Data storage firm Iomega Corp. said on Tuesday its matchbook-sized discs will be incorporated into the popular Rio portable audio devices, setting the stage for dramatically cheaper MP3 players.

MP3 is a compression format that converts music on compact disks into small digital files.

Rio President Jim Cady said his company, a division of SONICblue Inc, expects to sell a portable digital music player that uses Iomega's 100 megabyte (MB) PocketZip drive by the second half of this year.

"There are no disclosable terms as of yet," he said. "We're still finalizing the details."

The price of MP3 players have remained stubbornly high compared to portable CD players, in part because of the daunting cost of memory. Sixty-four megabytes of the commonly used CompactFlash format, which holds about an hour of CD-quality audio, can cost upward of $75.

But Iomega's newly released 100 MB PocketZip discs cost as little as $10, the company said. Iomega competitor DataPlay Inc., which also has an alliance with Rio, says its soon-to-be-released discs will cost $5 to $10 and will hold 500 MB -- good for at least six hours of high-quality music.

Iomega and DataPlay offer discs with moving parts, as opposed to the solid-state CompactFlash and SmartMedia formats. But both companies say their discs are durable enough to be used in portable devices without skipping.

Iomega and Rio said further information would be forthcoming when a PocketZip-enabled Rio was closer to market.

But Rio executives said the company was not committed to any one type of storage, and planned to eventually let users switch back and forth between memory standards by swapping ``backpacks'' that fit onto the portable Rio devices.

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