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Tuesday, July 19, 2011, 12:00 am PT (03:00 am ET)

Launch of Apple's iCloud could weaken market demand for NAND flash

Some industry players are concerned that Apple, the world's largest consumer of NAND flash memory, could cause demand for memory to dwindle with the introduction of its iCloud service.

Apple's free iCloud could potentially lessen the reliance on storage capacity on users devices, including iPhones, iPads, PCs and Macs, posing a threat to the NAND flash industry, IHS iSuppli has said.

As noted by DigiTimes, the firm predicts the Cupertino, Calif.-based company will account “for nearly 30% of global (memory) demand" in 2011.

"Shipments of NAND flash memory for various Apple products are anticipated to reach 5.2 billion GB-equivalent units in 2011, out of a total global market of 18.5 billion GB-equivalent units,” analysts indicated.

IHS Suppli further added that Apple’s 28.3 percent share is the “single largest block of NAND flash consumption by one company." Apple's dominance in the flash memory market appears set to continue for a few years and is expected to remain at 29 percent for the next two years. But, the company's portion of the market will gradually slide to around 25 percent in 2015, if IHS is to be believed.

IHS memory analyst Dee Nguyen said Apple's move to the cloud could have "significant implications" on the memory market. "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," the analyst said.

IHS estimates that iCloud could theoretically decrease storage needs by as much as 100GB per user, based on a rough calculation of "a rate of 4MB per song at Apple's stated cap of 25,000 songs." The resulting drop in demand could "make a serious dent" on NAND flash industry's profits, according to the firm.

iCloud


However, the firm did cite several reasons why any near-term danger to the NAND flash industry is likely to be low. Firstly, given that few users have achieved true perpetual connectivity, offline storage will remain important for access.

Cost is also expected to limit the move to the cloud. iCloud only comes with 5GB of free storage, plus unlimited storage of music purchased directly from the iTunes Store.

The iTunes Match feature, which costs $24.99 a year, allows users to store their entire music collection, including songs ripped from CDs and downloaded outside of iTunes, in the cloud. According to IHS, certain users would shy away from the annual fee, instead preferring to invest in more storage for their devices.

Most importantly, with high-profile hacking scandals that have dogged the likes of Sony and others still fresh in the mind of consumers, the idea of having personal data stored in a centralized location outside of their control may turn some users away.

Apple first announced iCloud on June 6, 2011, alongside iOS 5 and Mac OS X Lion. The service is scheduled to launch this fall.