By Laurie Sullivan, TechWeb Technology News

SanDisk Corp. said Monday its begun shipping USB drives to retail stores preinstalled with Skype`s VoIP software.

Plug earphones with microphone and the SanDisk drive into a PC. A phone keypad pops up on the PC`s screen allowing consumers to make free PC-to-PC calls to Skype users in most major markets.

On the SanDisk drives, consumers will find a bundle of four applications that consumes about 40 MB of storage space on either the Cruzer Micro or the Titanium flash drives. Aside from Skype, the drives include a password-protected synchronization tool, antivirus software, and password manager application that can remember passwords for online trading and banking.

The pre-laded applications are based on U3, a technology SanDisk co-developed that provides application developers, such as eBay Inc.`s Skype, with a standard platform to create apps for portable devices.

Carlos Gonzalez, SanDisk`s senior director of USB product marketing, believes adding the software could sway a consumer`s decision on which drive to buy as they stare at a retail store shelf filled with USB drives from SanDisk, Lexar, PNY and others. ``You have to give consumers more for their money, and this could create a nice differentiator for us,`` he said. ``It remains to be seen whether people initially recognize the value.``

Ultimately, it`s about setting one manufacturer`s flash drive apart from another. Business travelers might find the service helpful, especially when traveling overseas. Skype works anywhere there`s a PC and broadband connection.

The service doesn`t run on the Apple Mac OS platform, yet, SanDisk said. But Window`s users can plug the device into any PC or laptop running Windows. The flash drive loads and holds the software; then removes it when unplugged.

Keeping the phone conversation private in a public Internet Caf will require a headset with microphone, which doesn`t come with the flash drive and software.

``Take along a headphone with microphone,`` said Jan Dawson, principal analyst at research firm Ovum. ``Not many have picked up on the fact that the software isn`t enough, unless they don`t mind everyone listening to the conversation.``

Hooking up with SanDisk could turn lucrative for Skype, as well. SanDisk ranked No. 1 in market share last year, according to iSuppli Corp. The El Segundo, Calif., research firm estimates SanDisk garnered $346 million of the $2.8 billion in total USB flash drive revenue, or 12.2 percent global market share.

But SanDisk and Skype face competition from a range of telecommunications companies. Vonage in June introduced V-Phone, a telephone application installed on a USB flash drive. Plug the drive into any PC and a phone keypad pops up on the screen. The V-Phone comes with earphones, a microphone and unlimited calling plans.

Users also can receive calls and direct them to a cellular phone. Vonage sells the V-Phone for $40 plus a $9 activation fee, and you get a new phone number with the service. The new SanDisk drives, with a Skype logo displayed on the package, will sell at retail stores, such as Best Buy Inc., Wal-Mart Stores Inc., and Office Depot Inc.