Earlier this fall, Hewlett-Packard (NYSE:HPQ) announced that it had developed a super-small data storage chip, dubbed Memory Spot, about the size of a grain of rice.
In the original press release, management noted that it would be a few years before any applications were ready for the commercial marketplace, so I just filed it away.
The more I think about it, however, the more I am convinced that Memory Spot could represent a nice long-term revenue stream for the company because of the chip's ability to fill a sweet spot between the digital and the physical worlds.
In one way, the product can be considered a cross between a sophisticated bar code and a high-performance radio frequency identification (RFID) tag. What distinguishes the Memory Spot is that it can currently hold 4 megabits of data -- much more than either bar codes or RFID tags. Also, because it can only be read by nearby devices, it avoids many of the privacy-related concerns that plague the widespread adoption of RFID.
The Memory Spots currently cost around $1. This means that they are extremely unlikely either to replace bar codes or to compete with RFID tags, as the price remains one of the bigger obstacles to their widespread adoption.
Still, price alone is not a barrier. HP need only find those opportunities where businesses or consumers might like to have more information about a particular product, process, or person and are willing to pay a premium for that information.
I am confident that such opportunities are available. For instance, hospitals and nursing homes could store medical records in a chip fixed to a patient's wristband, thus freeing themselves up from costly and time-consuming administrative paperwork. Major pharmaceutical firms, such as Pfizer (NYSE:PFE), could attach the chips to bottles of Viagra or other drugs to help prevent counterfeiting. Other applications include attaching the chips to movie posters, where they could provide more information to potential viewers. Even photos could be enhanced -- allowing Grandma not only to see a picture of her grandson, but also to hear him explain in his own words what he was doing in the photo.
If you are curious about how the Memory Spots would work, the chip will merely need some sort of external device to "read" the contents within it. The most obvious device is the cell phone.
And it is here that I see the real potential for the product. I have written in the recent past about Sprint Nextel (NYSE:S) and Intel's (NASDAQ:INTC) efforts to create a new super-charged wireless environment. I have also written about Motorola's (NYSE:MOT) acquisition of Symbol Technologies (NYSE:SBL), which I believe was undertaken to gain advantage of both Symbol's RFID-related technology and its intellectual property in the area of handheld devices.
The Memory Spots, by creating additional pockets of information that businesses and consumers alike can utilize to maximize how, where, and what information is transmitted and received, can allow HP to embed a deeper and more intimate reservoir of information into a variety of daily routines.
In so doing, the devices could not only make businesses more productive, they could make a lot of people's lives more convenient. And if HP can do this, it will have found a very sweet spot indeed.
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Intel and Pfizer are Inside Value picks.
Fool contributor Jack Uldrich doesn't have any memory spots yet, but he does have a bald spot. He does not own stock in any of the companies mentioned in this article, with the exception of Motorola. The Fool has a strict disclosure policy .
