Microsoft and SanDisk have inked a deal to create USB flash drives and memory cards with built-in software and user preferences to replace SanDisk's existing U3 Cruzer line.

Under the agreement, Microsoft will develop new software and SanDisk will cover the hardware for the products.

SanDisk rep Mike Lanberg said the disks will let users access their encrypted financial, corporate, and personal data on public or shared computers without leaving the information behind when they leave.

The partnership will replace and expand upon SanDisk's current application-launching flash storage line, U3. The offering is expected to be commercially available starting in the second half of 2008. The U3 line will be sold and supported until the new release, Lanberg said.

SanDisk said its partnership with Microsoft will allow the applications to be more tightly integrated with Windows operating systems, as well as enhance data security. The flash storage drives will support both XP and Vista.

Microsoft has plans to begin recruiting third-party hardware vendors interested in licensing the new software. The two companies said they will create "a new entity" to license compatible hardware designs from both Microsoft and SanDisk. These revenues will be shared by the two companies. ®

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