It's a simple case of where Apple goes the industry goes and that could be bad news for manufacturers of NAND flash memory.
Apple's use of NAND flash in its products has set the tone for the emerging market. However, demand for NAND could take a tumble if Apple's iCloud service takes off according to a new report from the IHS iSuppli Memory and Storage Service.
Apple has contributed greatly to the growth of the NAND business in recent years, 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.
Apple will remain the world's largest buyer of NAND flash memory this year because of the iPad and iPhone, accounting for 30 percent of global demand. Of the global market of 18.5 billion gigabyte-equivalent units, Apple products represent 5.2 billion gigabyte-equivalent units. However, this could cause trouble as Apple stresses iCloud.
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, Nguyen said.
Nguyen says free storage of songs on iCloud would decrease the need for local storage on the PC, smartphone or tablet. If there was a decrease of consumption of 100 gigabytes per user, the effect from Apple's huge database of users would cause a huge dent in NAND flash demand.
Apple released the iCloud back in June at its annual Worldwide Developer's conference. The service offers seamless integration and access of music, photos, apps and documents on Apple servers with any Apple device. While there have been other cloud systems, Apple has the biggest ecosystem of any technology company and the most likely to impact NAND flash technology.
Still, Nguyen says the threat from the cloud is still low in the short and midterm. IHS still expects demand for flash technology to increase all the way to 2014. For one, Nguyen says cloud is only available through Wi-Fi technology and that has limited availability. Plus, there is a cost factor. NAND is a lot cheaper than the cloud price of $24.99 for the iTunes Match storage fee.
To be sure, consumers can overcome the cost factor. But until issues surrounding data security can be adequately addressed-and more important, until Wi-Fi access becomes more widespread-the future for NAND flash memory remains relatively safe, Nguyen says.
Follow Gabriel Perna on Twitter at @GabrielSPerna