Could iCloud Rain on Flash Memory’s Parade?

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Could Apple’s introduction of iCloud to store music and other data online hurt demand for flash memory? That’s the concern of some who forecast the new service could “make a serious dent” in the NAND marketplace.


The iCloud service, expected later this fall, could decrease the need for flash memory by as much as 100GB per user, according to analysts at IHI iSuppli, which bases its estimate on 4MB per song and Apple’s cap of 25,000 songs stored on iCloud.

Apple currently consumes about 29 percent of the world’s flash memory supply, making any fluctuation in the Cupertino, Calif. firm’s demand worrisome. The tech giant uses flash memory for storage in the iPad, iPhone, MacBook and elsewhere.

“With Apple products like the iPhone and iPad accounting for a disproportionate share of NAND flash demand, any move among Apple users to offload storage to the company’s iCloud service could mean a corresponding decrease in demand for physical NAND flash memory in the future,” IHS memory analyst Dee Nguyen tells industry publication DigiTimes.

By 2015, Apple’s current 29 percent of the flash memory market will fall to about 25 percent, IHS predicts. However, Apple isn’t likely to damage a market it profits from handsomely. As we reported earlier, the company makes huge profits by relying on flash memory for its most popular gadgets, one of the reasons why Apple chose to sync users’ music collections, rather than stream tunes, like Amazon.

Although a consumer pays $100 more for a 32GB iPad versus a 16GB model, Apple pays just $15 – an 85 percent margin, according to the Wall Street Journal. Meanwhile, flash memory prices continue to fall, dropping by 30 percent this year and another 36 percent in 2012.

At some point, there will be a tipping point, when more Apple users store their data online than locally. At that moment – when it doesn’t matter if you device has 16GB or 32GB of flash memory – someone will likely take steps to right the imbalance.