Some questions about competition and Apple

I wrote yesterday about a report that Apple is using one-third of the entire world’s supply of NAND flash devices. for its products, such as the iPhone, iPod and soon to be iPad. NAND flash memory is cheaper and has higher capacity , with faster data transfer rate, than other types.

What does that mean for any company that wants to provide a competitor to the iPhone or iPad? Where are they going to get the memory from? How can Sony create an iPhone killer if it can not get enough of the solid state devices needed to make it work? Well, I guess Sony is big enough to buy up its own supply but will some of the others who are not Nokia?

Most cell phones before the iPhone did not have lots of internal memory, relying on the customer to pay for and provide their own. Now smartphones are expected to have lots of internal memory, because of the iPhone. Much harder for other companies to compete if memory supplies are constrained, due to Apple.

Apple spent $500 million setting up a long term deal with Toshiba to provide the NAND memory. Apple has a huge pile of money to keep adding as incentives to get the memory it needs. It does not have to deal with the spot market at all. How many other companies could do the same? Just a few.

So it may be that Sony, Nokia and Apple are the only ones who have a real chance at some of this technology, simply because of their size and heft. They can all buy up lots of memory with long term contract. I wonder if there will be room for a novice such as Microsoft and its mobile ideas? Microsoft has experience selling operating systems and software. It will be dealing with companies whose whole reason for existence is selling hardware and have spent many years learning the game.

I guess it is a nice time to be a NAND flash memories producer.


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