The skirmish between rotating and solid state storage (SSS) continues. Solid state storage proponents have lost a number of bets over the years to the rotating media barons. The bet? When solid state storage would overtake rotating storage in the market place.

With the emergence of solid-state USB flash drives (“pen” drives), it looked like SSS was mounting a credible attack on disk storage at the very low end. And sure enough, Iomega has taken it in the shorts as small, cheap and reliable pen drives have wiped out the market for Zip drives. Now I am seeing 1GB pen drives for $70, an incredible reduction in price from the $1 per MB price of just four years ago for the first pen drives.

But rotating storage forces have staged a counter-attack that looks to bound the pen drive market. Fry’s is offering a 2.2GB USB mini-drive for $89, or about $40/GB, almost half of what flash has achieved after four years of effort and high volume sales. It is too early to say if the new mini-drives will take off, but it a clear shot across the bow of SSS forces. While I love the small size and convenience of pen drives, history suggests that within a year we will see 8-10GB USB mini-drives for under $150.

It looks like pen drives will be confined to a sub-$100 niche and are not the beginning of the eventual take-over by SSS of higher price point storage markets.