Tokyo ? Toshiba Corp. has developed what it believes is the smallest functional hard drive for next-generation cell phones and other portable gadgets — a nickel-sized disk that can store two to three gigabytes of music and video.

At 0.85 inches in diameter, the Toshiba drive would beat a 1-inch model from Hitachi Global Storage Technologies, Hitachi’s U.S. unit. But the Hitachi drive stores 4 gigabytes.

Toshiba plans to start taking orders from device makers by next summer and start mass production of the tiny drives as early as 2005, spokeswoman Midori Suzuki said.