Apple’s pickin’ a lot of bushels for Samsung’s NAND Flash memory chips, buying 40% of Samsung’s output to put them in Apple’s newest iPod sapling, the iPod Mini. The tiny little chips will be seeded into the Mini fruit in time for the holiday season.
Apple offers the Mini with Flash technology already, but this will ad some more size to the line. This should help strengthen the line, depending on what the price point ends up being. This should be a really great deal for both Apple and Samung both though.
Apple may get some cheaper prices since they’re buying such huge quantities. Samsung sold nearly $2.45 billion during the first six months. Nam Hyung Kim, a researcher for iSupply suggests Samsung may even have cut Apple a deal on hard drives too with this huge purchase.
BusinessWeek reports that Apple sold 6.1 million iPods for $1.1 billion in the last quarter, which figured in at about 30% of their total sales. Kim suggested that if Apple cranked out a Flash based mini, Apple could sell between 3 million and 6 million units. He said it would boost NAND sales by 22%.
Apparently, Samsung makes a ton of money off the NAND flash because Samsung has extremely high profit margins. This gives them a lot of room to play with Apple and still make a profit. The chip is about twice the price of the equivalent 4GB hard drive.
Apple’s quantity will drive the price down though. Gartner analyst Joseph Unsworth told Red Herring that Apple’s Shuffle created a lot of demand because the unit came in with a strong price point of $99. He put things in perspective. Samsung has 55% of the business and Apple’s got 40% of that. As he put it, “That’s an awful lot of Flash.” Apple will get the big discount and that will allow them to start with the low price. Users could quite possibly see the new improved versions of this iPod for $199. Competition will tighten as a result.
John Stith is a staff writer for Murdok covering technology and business.
