Toshiba plans to begin sample production next year of a coin-size hard-disk drive that can hold up to 3GB of data, the company said today.

The new drive contains a disk platter that is 0.85 inches in diameter with a data capacity between 2GB and 3GB, said Midori Suzuki, a spokeswoman for Toshiba.

Toshiba will demonstrate a prototype of the drive at the CES show that takes place in Las Vegas in January 2004 and plans sample production from the middle of 2004. Commercial production could begin as early as 2005, Suzuki said.

At present, the smallest commercial hard-disk drives in mass production have one-inch platters. These products include Hitachi's MicroDrive and the Storage Element drive launched earlier this year by Cornice.

The one-inch drives offer data storage capacities of up to 4GB, in the case of the MicroDrive. But they are too large for some portable electronics products, meaning makers are left with little choice but to use the much more compact but more expensive flash memory.

While flash memory meets the physical size requirements demanded by products such as digital music or video players, personal digital assistants and mobile phones, the increasing ability of such devices to handle multimedia applications requires a high-capacity and low-cost storage medium. This is pushing drive manufacturers to experiment with sub one-inch drives in an attempt to meet both physical size and data capacity needs.

The market for 1.8-inch and smaller hard disk drives is expected to grow several-fold over the next five years, according to data from market analysis company Coughlin Associates. The company estimates shipments of such drives will total 3.3 million drives this year and grow to 23.7 million in 2008.