updated 11:40 am EDT, Fri July 6, 2007
iPhone Spikes Memory Price
The increasing popularity of iPhones, iPods, and their reliance on flash memory could paradoxically cause problems for the memory-making industry, according to industry representatives and analysts. By building in as much as 8GB of NAND flash storage in the iPhone and potentially switching to flash for future high-end video iPods, Apple is threatening to dry up the overflow of memory that currently exists in the market, curbing discounts and possibly forcing price hikes to discourage buying an excess of flash chips.
In particular, Apple's emphasis on relatively large quantities of flash for its first phone could be especially troublesome, says memory producer Kingston Technology's flash marketing head Mark Leatham. The average of 6GB of memory per iPhone is 100 times larger than the typical cellphone, which the executive believes to hold only 60MB. An order for 5 million iPhones would by itself be equal to producing enough flash for half a billion ordinary cellphones, Leatham says. Estimates from iSuppli and Goldman Sachs suggest this may be realistic, putting added strain on supply chains even if the line were to remain static.
But adding more flash-based iPods could skew the market further, claims analyst group DRAMeXchange Technology. The mixture of significantly expanded use of flash with the usual climb in iPod sales during the end of the year may create supply issues as well as tip the balance of the flash industry in favor of Apple, which DRAMeXchange estimates could make up a quarter of the entire flash market with such a change.
Apple's decisions in 2007 could also have a trickle-down effect to other device makers, analysts commonly observe, as cellphones, media players, and other electronics are forced to ramp up their default storage to remain competitive.