If you store e-mail online at Gmail or Yahoo Mail, digital photos at Snapfish or Flickr, documents at a virtual storage site like Box.net, or your personal profile at MySpace, you’re using what networking professionals call Web 2.0 – a growing collection of services that let you leave your personal data on a Web server and access it from anywhere, often using software applications that also reside online.

But there’s a competing personal-computing technology that’s evolving in the opposite direction. Programmers are creating versions of the free Linux operating system small enough to fit on – and boot directly from – a USB flash drive. And now several companies are marketing and developing ways to use these ultra-portable storage devices to carry all of one’s data and applications – including personalized desktop environments resembling mini-operating systems. In this way, you can have all your data with you at all times – ready to plug into any computer you happen to be near.

This alternative could appeal to computer users who are not entirely convinced of the reliability, privacy, and security of Web-based storage and software. “With all of the Web 2.0 sites, we’ve achieved an aspect of independence [from our computers],” says Richard Kilmer, CEO of Herndon, VA-based InfoEther, which is testing a flash-drive operating environment called indi. “All you need to use Web 2.0 is a browser and an Internet connection. But that kind of independence comes at a cost: you become highly dependent on those sites existing, and keeping your data around, and not changing the terms on what you can do with it.”

In 2005, consumers and businesses spent more than $2 billion on USB flash drives worldwide, according to technology research firm Gartner. And the company expects sales to increase 15 percent per year through 2010, driven in part by interest in “smart drives” carrying software or operating environments. It helps that these drives are increasingly capacious and affordable: a one-gigabyte drives can now be purchased for $40-50.

The best-known system for carrying applications and data on a USB drive is from U3, which is jointly owned by flash-drive manufacturers M-Systems and SanDisk, both of Sunnyvale, CA. U3’s system is designed mainly to run third-party applications, such as Web browsers and instant-messaging software, directly from a flash drive, rather than having to install the software on a local hard drive. This way users can, for example, transport their personal copies of Mozilla Firefox or Skype along with all the bookmarks and preferences they’ve created.

Still, U3’s system depends on Microsoft’s Windows as its underlying operating system, and it doesn’t transport a user’s overall computing environment, just applications and data. By contrast, InfoEther’s indi software turns a USB flash drive into an information appliance with its own operating environment and customized applications. Once the indi software is downloaded from InfoEther and saved on a flash drive, it launches automatically the next time the drive is plugged into a computer’s USB port. Indi includes a set of personal organizer applications, including a calendar, address book, memo pad, and instant-messenger program.

InfoEther – which released a preliminary version of its system in March, and has signed up almost 1,000 beta users – has designed indi’s applications so they can connect over the Internet with programs being run by other Indi users, allowing activities like file sharing and multiplayer games. While the indi platform and the basic applications are free, users will soon be able to buy additional “plug-in” programs from a store built directly into the Indi interface, Kilmer says.

It’s still unclear, though, whether such portable, self-enclosed operating environments will appeal to many computer users at a time when new Web-based applications seem to emerge every day. Alex Bard, CEO of goowy media in San Diego, which offers a package of online information-management tools, such as a calendar and an address book, is skeptical. “Those applications, in order to be successful, will still have to connect up to the Web to share data,” says Bard. “And if they’re connecting to the Web anyway, why do you even need a flash drive? I don’t see the true value in carrying your operating system around on a stick, unless you’re really proprietary about your data and concerned that the data you store in the cloud will be corrupted or that someone will get access to it.”

While Web-based systems like Goowy and pocket workspaces like Indi may seem to be opposites, they have something important in common: they abandon the decades-old idea of the PC as a computer user’s main information stronghold in favor of more fluid environments and user interfaces. “The notion of having everything on your fixed hard drive is going away,” says Kate Purmal, CEO of U3. “People are going to start choosing to install software on their smart drives, not their hard drives, because it’s more portable and because they want to be able to switch between computers.”

Home page image courtesy of U3. Caption: The Memorex Mini TravelDrive, a USB drive that carries U3’s personal workspace system and applications such as Mozilla Thunderbird, an e-mail management program.