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Solid-state drives (SSDs) are used instead of hard disk drives in select high-end notebook PCs today such as the Apple MacBook Air and Toshiba Portege R500.

The next generation of SSDs will use multilevel cell (MLC) technology, which will require a more sophisticated controller--a crucial component in solid-state drives. These drives will have capacities ranging up to 128GB, 160GB, and later, 256GB. MLC drives are expected to appear in a wider selection of notebooks later this year.

Speaking during SanDisk's second-quarter earnings conference call, Chairman and Chief Executive Officer Eli Harari said that Windows Vista will present a special challenge for solid-state drive makers. "As soon as you get into Vista applications in notebook and desktop, you start running into very demanding applications because Vista is not optimized for flash memory solid-state disk," he said.

This is due to Vista's design. "The next generation controllers need to basically compensate for Vista shortfalls," he said.

"Unfortunately, (SSDs) performance in the Vista environment falls short of what the market really needs and that is why we need to develop the next generation, which we'll start sampling end of this year, early next year," Harari said.

Harari said this challenge alone is putting SanDisk behind schedule. "We have very good internal controller technology, as you know...That said, I'd say that we are now behind because we did not fully understand, frankly, the limitations in the Vista environment," he added.

In the very low-end of the market, however, this is not an issue. "In very low-end, ultra low-cost PCs, existing controllers can get the job done for 8-, 16-, and 32-gigabyte storage because these are relatively unsophisticated and demanding requirements," he said.

SanDisk has a production joint venture with Toshiba, which also makes solid- state drives.