Microsoft and SanDisk have announced they have signed an agreement to deliver a next-generation software and hardware solution to for USB flash drives and flash memory cards, expanding on and replacing SanDisk’s existing U3 Smart Technology.

The new offering for USB flash drives and flash memory cards promise to give users greater mobility, more security and "seamless integration" with windows-based PCs.

Microsoft will be in charge of developing the new software and SanDisk will develop the new hardware (which kinda makes sense). SanDisk will then incorporate the combined software and hardware solution on removable flash memory cards and Cruzer USB flash drives. The new offering is expected to be commercially available starting in the second half of 2008.

Current U3 smart drives are the size of a pack of chewing gum and let users carry not only files but also Windows software applications with their associated preferences and settings. Consumers simply plug a U3 smart drive into any Windows-based computer’s USB port to securely access personalised email programs, web browsers, productivity tools, multimedia applications and more. When they unplug their U3 smart drive, they take their personal information with them.