Consumer-electronics giant Philips is demonstrating a prototype miniature disc drive that uses a coin-size disc capable of storing nearly twice as much data as a standard-sized CD.

The drive uses 3cm discs that can store up to 1GB of data. Typical CDs, measuring 12cm in diameter, can hold up to 650MB of data. The prototype drive measures just 5.6 by 3.4 by 0.75cm--suitable for use in portable devices such as digital cameras, handhelds and cell phones--but the company is continuing to work to shrink the drive.

Philips issued a release this week, but representatives were not available to comment Wednesday.

The increased storage is made possible by way of blue-laser technology. Blue lasers have shorter wavelengths than red lasers, which are used in current optical CD drives to read data off discs. Philips has been promoting the technology and is one of nine companies in the "Blu-ray Disc Founders." The group is pushing a new blue-laser format for standard-sized CDs, which will increase their capacity to 27GB.

Other Blu-ray founders include Hitachi, LG Electronics, Matsushita Electric Industrial, Pioneer, Samsung Electronics, Sharp, Sony and Thomson Multimedia.

Optical drives and discs are less expensive than the flash memory typically used in portable devices today. The low cost of the discs makes the format more appealing to consumers than removable flash memory cards, but adding a new storage technology to devices is expensive, according to Gartner analyst Mary Craig.

"It takes a lot of money to develop and market a mini-drive for devices," Craig said.

DataPlay is also working to add mini-drive technology to portable devices but has taken longer than expected to release a product, Craig said. DataPlay discs will be able to hold 500MB of data and are also just 3cm wide.

"The advantage for Philips is that they have been in the market for years," Craig said.