"An iPod is just storage at the end of a wire," said John Webster, an analyst at Data Mobility Group LLC in Nashua, New Hampshire. "You already see people using [iPods] as backup devices. USB storage devices are a potential source of data leakage."

Such concerns from corporate IT managers about corporate data loss have prompted vendors to develop products that can secure flash memory devices. For example, Kingston Technology Co. earlier this month released a USB flash drive that secures data using password protection and 128-bit hardware-based AES encryption.

Kingston's DataTraveler Elite Privacy Edition device offers up to 4GB of secure storage and has a mechanism that locks out potential users after 25 consecutive failed password attempts.

Recognizing the risk

Baptist Memorial, which operates 20 hospitals and a network of outpatient and ambulatory surgery facilities, clinics and other health care facilities, uses the 1GB version of Kingston's USB drive.