DataPlay signs distribution deal with Imation

Start-up DataPlay has signed data storage company Imation to be the first U.S.-based manufacturer of blank and prerecorded discs in the company's new media format.

The deal announced Tuesday is for one year with continued updates depending on the success of the media. Financial terms of the deal were not disclosed.

DataPlay discs are expected to be available in the fourth quarter of this year. Devices using the digital format, such as MP3 players and digital cameras, are likely to follow shortly after. More devices, such as eBooks, handhelds and cell phones, are expected in the first quarter, according to DataPlay.

Discs are about the size of a quarter and have a 500MB capacity--about 11 hours of music. The price is expected to be around $10 per disc.

The new format is the answer to many problems in the portable media storage market, said IDC analyst Bryan Ma, but it's got a tough road ahead.

"It's a great concept on paper: inexpensive, portable and high capacity," Ma said. "But the task in front of it is daunting."

The new format is going up against media formats such as CompactFlash, SmartMedia and Memory Stick, which are being used by manufacturers in devices that are already in the market.

"It's a chicken and egg thing," said IDC analyst Danielle Levitas. "It's a cool new media, but manufacturers won't use go with it until it gets some momentum, and they're the ones that can generate the momentum."

The media format has 40 partnership companies, including Toshiba, Samsung, Olympus and Sonciblue.

Levitas said that the news of the Imation agreement was good for the company, but "the thing to look for is how fast and who will begin to integrate the engines for the media into their devices."

Earlier this month the company received an additional $55 million in funding from Eastman Kodak, Intel Capital, Olympus Optical, Trans World Entertainment, MeVC Draper Fisher Jurvetson Fund, Imation Corp., Sequel Venture Partners, Colorado PERA, Portage Venture Partners, SG Cowen Securities, A.G. Edwards Capital, Graystone Ventures and musician David Crosby.