Thank Apple for dramatically falling flash memory prices
"When Apple Computer CEO Steve Jobs introduced the iPod Nano on September 7, he predicted it would be the best-selling iPod model ever," Antony Bruno writes for Billboard. "That is a strong statement, considering the Nano is only Apple's second device to incorporate flash memory instead of a hard drive. It is an even stronger endorsement of flash-based technology from a company that until this year declined to use it in a single product."
"Flash-based devices store content on a chip, which unlike a hard drive contains no movable parts. This means flash players use less battery power -- 30 times less --than hard-drive players, as well as being much smaller and extremely durable," Bruno writes. "The trade-off is that flash memory chips have a limited storage capacity and a higher price than their hard-drive counterparts, which boast 10 times the capacity at half the cost. But flash costs are dropping dramatically. According to semiconductor research firm iSuppli, the price-per-megabyte cost for flash memory has fallen 56 percent in the last year. The firm projects the price will fall an additional 47 percent by next year and then another 33 percent by 2007."
Bruno writes, "Analysts believe the falling flash prices are key to the evolution of the MP3 player as a mass-market device. Jupiter Research estimates there will be 56 million MP3 players in the world by 2010, and more than half will be flash devices that hold 1,000 songs or less, with about 5GB. 'Flash-device sales will surpass hard-drive sales,' Jupiter Research analyst David Card says. 'But the technology is not important. What's important is reaching a certain capacity at a certain price point at a certain size.' Research suggests that most owners of hard-drive-based devices that can hold 10,000 songs or more do not come close to using the full storage capacity. According to Card, only about 20 percent of iPod users have more than 1,000 songs on their players. No surprise then that MP3 device manufacturers, including Apple, are counting on smaller and cheaper devices to drive the digital music player market forward."
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