SanDisk's U3 Scores Skype

Sometimes, good things do come in small packages. The Cruzer line of U3 Smart Drives from SanDisk (Nasdaq: SNDK  ) has been relaunched with a refreshed bundle of preinstalled software, now including eBay's (Nasdaq: EBAY  ) VoIP application Skype. But the proprietary nature of the platform raises some questions about its real-world utility.

I know, I know, that's a lot of geek-speak. What does it all mean?

U3 is not Bono's new band
The U3 platform, codeveloped by SanDisk and the modestly named M-Systems Flash Disk Pioneers (Nasdaq: FLSH  ) , is an open standard allowing software developers to package their products in a way that lets users carry all their files and programs on a single USB drive, accessible from any computer. For instance, if you install the U3 version of the Firefox browser on your SanDisk Cruzer, you can run it with all your settings and bookmarks on any PC with an open USB port, whether it's a lab computer at your school, your home PC, or your laptop.

U3 drives use some very Windows-specific trickery for this feat, convincing the operating system that part of the USB drive is really a CD-ROM, so that the manager application can start automatically every time you plug the drive in.

Supported packages so far include multiprotocol instant-messaging app Trillian, the aforementioned Mozilla Firefox browser and its mail-reader cousin Thunderbird, and media player WinAmp from Time Warner subsidiary NullSoft. Skype has long been on the supported application wish list, and now that it's here, only SanDisk players will ship with Skype preinstalled, thanks to an exclusive agreement. Owners of U3 devices from makers like Imation brand Memorex or the Best Buy (NYSE: BBY  ) Geek Squad store brand will have to download the Skype client on their own.

Common criticisms
The U3 concept sounds great on paper, but it does have its weaknesses and quirks. It only works with U3-certified programs that have been specially coded to support the portability features. Although the programs you run from a U3 drive should remove all traces of themselves when you unplug the drive, several reviews say that some files often stay behind.

But perhaps most significantly, U3 is tied specifically to Microsoft (Nasdaq: MSFT  ) Windows, and will not work with Linux or Apple (Nasdaq: AAPL  ) Macintosh systems. That puts a damper on the claims of true portability, to say the least. It can also be a real issue for students, since Macs are especially popular in schools and universities.

You may also note the absence of Lexar, Micron's (NYSE: MU  ) latest acquisition, from the list of third-party U3 manufacturers. That's because Lexar is pushing its own PowerToGo portability solution. I'd much prefer cross-platform, cross-manufacturer standards that would encourage software developers to come up with more and better products.

But all in all, U3 drives do look good, and the Skype addition might give the technology a shot in the arm. The portable storage market is moving away from simple, commoditized drives, toward more innovative spins on what those drives can do. For market leaders and innovators like SanDisk, this can only be a good thing.

Further Foolishness in a flash:

• Here's a look at what Lexar means to Micron.
• And for that matter, what flash memory means to SanDisk.
• If you really did want to read about U2, not U3, we've got you covered.
• Could any of these companies become Rule Breakers?

Microsoft is a bargain-priced Inside Value pick, while Best Buy, eBay, and Time Warner have made the cut at David and Tom Gardner's Motley Fool Stock Advisor . For even more superior investing advice, try any of our Foolish newsletter services free for 30 days.

At 6'6", Fool contributor Anders Bylund does not come in a small package, and he owns none of the stocks discussed today. Foolishdisclosureis freely downloadable and fits neatly in your coin pocket.