By Susan B. Shor MacNewsWorld Part of the ECT News Network
08/24/05 3:00 PM PT
Flash memory cards offer some advantages over hard drives in portable devices; they have no moving parts, so are shock resistant and less likely to break with a lot of jostling, they also use less power, can read and write data more quickly and don't make noise. The downside is their higher cost.
An unconfirmed report today from Reuters quotes an industry analyst firm iSuppli as saying that Apple (Nasdaq: AAPL) plans to buy as much as 40 percent of Samsung's second-half flash memory output.
The NAND flash memory cards will be used in a new, 4 GB iPod Mini, which Apple would release in time for the holiday shopping season, the report stated. The current version of the 4 GB mini contains a hard drive. Apple's iPod Shuffle uses flash memory.
Good for Mobile, Bad for Wallet
Flash memory cards offer some advantages over hard drives in portable devices; they have no moving parts, so are shock resistant and less likely to break with a lot of jostling, they also use less power, can read and write data more quickly and don't make noise. The downside is their higher cost.
Analysts speculate that Samsung would have to lower the price of its flash memory by 50 percent to make the cards an attractive option for inclusion in the iPod Mini.
Attempts to confirm the report through Apple went unanswered, and Samsung, the world's largest manufacturer of NAND flash memory, said it does not comment on deals with customers.
Falling Costs
While flash memory is in high demand, prices for the cards have been dropping.
"In general, prices for flash memory have fallen drastically over the past year, but it has slowed down slightly in the past couple of months," Shawny Chen, data analyst with Current Analysis, told TechNewsWorld.
If the report is true, Apple's purchase could drive change in the flash memory market, Chen said.
"If Apple purchases 40 percent of Samsung's NAND flash memory for its iPod mini, digital audio player manufacturers would follow, especially since Apple commands the digital audio player market and the iPod mini is one of its bestsellers," Chen said.
Aiming at the 'Sweet Spot'
"Microdrive-based (4 GB to 6 GB capacity) digital audio players are the sweet spot for flash memory," the analyst explained. "Demand for flash memory would gain momentum from the digital audio market. At the same time, flash memory demand is also highly driven from the digital camera and mobile phones markets."
If Apple steps up production of iPods using NAND flash memory during the holiday season, when about 50 percent of its sales are made, it could create a shortage of the cards.
Will Microsoft Get a Bite of Apple's iPod? August 16, 2005
"Once a patent is granted, it's not a sure thing at all," said patent attorney and Townsend and Townsend and Crew partner Roger Cook. "It's by no means a sure thing that [Microsoft] would have a valid legal position against Apple. It would be a question of who invented it first."
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Gartner research vice president Martin Reynolds said the overproduction of Flash memory units will continue to lower prices, which will drive more demand and ultimately bring prices back up. "Just as it inevitably goes down, it inevitably goes back up," he said.
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"It's always been like that, particularly in memory," Gartner Research Vice President Martin Reynolds said. "iPod could increase the profitability of flash. It could also accelerate the time to the next downturn." Reynolds added, "When people figure out what to do with all that memory, the price goes back up."
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Samsung is already the undisputed industry leader for NAND flash memory production. The company boasted nearly 60 percent share of the market at the end of March. Toshiba is the closest competitor, with about 25 percent of the market, according to IDC.
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Beyond the Fad: Macromedia's Flash Matures July 30, 2003
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