The company says 592 million slotted phones were shipped worldwide in 2007, representing 53 percent of all cellphone shipments. Nearly 57 percent of these used the microSD (including microSDHC) slot format, which has now replaced the MMC format in popularity.

The microSD format is expected to hit peak penetration of 86 percent in 2011, after which it will face competition from other, high capacity systems, such as the Universal Flash Storage (UFS).

Steve Entwistle, Vice President of the Strategic Technologies within Strategy Analytics, commented: "Penetration of slotted phones is already over 85 percent in many developed countries. We are now seeing significant growth in emerging markets where demand for music and camera phones is taking off."

The market research group suggests demand for high capacity cards to store music, images, video and data will trigger significant growth in the high capacity microSDHC format this year and next.

Strategy Analytics also expects strong growth in embedded memory over the next few years, but notes the benefits of being able to upsize capacity and transfer data to a new phone makes memory card slots an essential requirement for all mid-to-high end phones.