The New York Times reports that Apple Computer got a bargain on the flash memory chips that help make its new iPod Nanos so compact. By doing so, Apple has forced up the price of flash memory for other manufacturers, and driven down the price for consumers.
30 Percent Discount for Apple
It's estimated that Apple received about a 30 percent discount on the memory chips from Samsung Electronics in exchange for buying roughly 40 percent of Samsung's total production of the chips this year. That purchase has reduced the supply available for other makers of other MP3 players. As a result, about 200 of these companies in Asia, perhaps half the industry, have gone out of business.
Prices Will Continue to Go Down
Another likely result, since the Nano can be used like a USB flash drive to move files from one computer to another, is that the price of flash drives will drop to compete with the Nano.
Flash memory is being increasingly used for game machines, cell phones, and other devices. Tough competition in the industry means consumers will likely see prices lower, and capacity increase, for some time yet.
My first cell phone nearly three years ago was a Samsung. I really hadn't heard much about them but when I did some research on them three years ago I was really impressed. When I was reviewing large screen TVs it was also very clear that they were the head of the class. They make the largest screens and have some of the absolute best technology.
This position used to be held by Sony of Japan, but Sony has had major cutbacks and about the only product they have going for them is their video game division and even that is questionable, as their new portable video game player leaves very much to be desired from my review.
With the recent announcement of Samsung investing a record $33 billion dollars in creating chip plants by 2012 it is beyond clear that they -- not Sony -- are the premiere electronic player in the world.
Althogh the video iPod is now in the news, a few weeks ago the iPod nano was the hottest iPod on the market. In case you did not know it, Samsung provided the NAND flash memory for the Nano.
You might also be interested in the blog post I wrote on the video iPod last week where I reveal which personal video player blows away the video iPod and also how you can "rip" DVDs to compressed video files.
Apple actually followed a Microsoft evil pattern by making a very sweet deal with Samsung. "Bad" Apple put the squeeze on small manufacturers by simultaneously snatching up a good portion of the available NAND flash devices (diminishing supply and driving up costs for other manufacturers) while at the same time offering the
Nano for very reasonable prices forcing other manufacturers to lower their own prices and accept thinner profit margins or go out of business, which is exactly what is happened as nearly 200 Asian businesses shut down as a result of Apple's move.
Sure doesn't seem like Apple is playing fair on this one. Seems to me Apple did the same thing when they introduced their original iPod.
They grabbed up nearly the entire supply of the tiny hard drives that were only being made by one manufacturer which essentially eliminated any competition because there were simply no parts available for them to compete. No one could build a device until another company started to make similar hard drives.
I own six different MP3 players and have carefully analzyed the market and am very confident that for people who desire to easily navigate teaching audio files the Cowon iAudio X5 is, without question, the best MP3 player currently on the market.
There are a number of VERY good reasons for this. I have been travelling the last three weeks and have not had enough time to document the logic that allowed me to reach this conclusion but I wanted to let you know now as many of you may make the mistake and purchase the clearly inferior Apple product.