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Apple's iCloud weakens NAND flash market

Posted: 19 Jul 2011     Print Version  Bookmark and Share

Keywords:iCloud  NAND  flash memory  iPhone 

Apple Inc.'s newly launched iCloud storage service could present a stiff competition to the NAND flash market causing the demand for the memory to weaken in the future, according to the IHS iSuppli Memory and Storage Service from information and analysis provider IHS.

According to the company, driven by best-selling products like the iPad and iPhone, Apple is expected to remain the world's largest buyer of NAND flash memory this year, accounting for nearly 30 per cent of global demand. Shipments of NAND flash memory for various Apple products are anticipated to reach 520 crore gigabyte-equivalent units in 2011, out of a total global market of 1,850 crore gigabyte-equivalent units. Apple's share of 28.3 per cent represents the single largest block of NAND flash consumption by one company.

Apple's portion will continue to climb during the following years, holding at 29 per cent for the next two years. Its share then will slide somewhat by 2015 but still will account for 2,390 crore gigabyte-equivalent units, or one-fourth of overall industry NAND demand.

"Apple has contributed greatly to the growth of the NAND business in recent years," said Dee Nguyen, memory analyst at IHS. "However, the company's adoption of cloud storage could have significant implications because the fastest-growing segment of the NAND flash market lies in the storage component of convergent mobile devices like smartphones and tablets. And 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."

For example, free storage of songs on iCloud theoretically would decrease the need for local storage on a PC, smartphone or tablet. If storage consumption decreased by 100GB per user—calculated at a rate of 4MB per song at Apple's stated cap of 25,000 songs of free storage—the combined effect from Apple's huge database of users could make a serious dent on NAND flash demand throughout the industry, IHS believes.

The launch in June of Apple's iCloud service promised users consistent integration and access of music, photos, apps and documents on Apple servers with any Apple devices that users might own, such as an iPhone, an iPad or any Mac computer.

Other cloud storage services exist, such as Sony's Music Unlimited, Amazon's Cloud Drive and Google's Music Beta Service, but all are at varying stages of availability.

According to the company, Apple not only has the most extensive ecosystem, it also has a vast user base to which the idea of cross-device integration will prove extremely appealing.

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