Reports: Flash Media Market to Explode; Prices to Plummet

April 4th, 2005 at 3:00 PM - Reports by Brad Gibson

If you think the popularity of flash-based music players, like the Apple iPod shuffle, is big now, just wait a few years. A new report is predicting the flash media market will more than triple from US$5 billion last year to $18 billion in 2009. A similar report says prices will fall quickly this year due to an oversupply and that consumers will reap the benefits in lower prices.

The analysis concern In-Stat reported Tuesday that digital still cameras, USB flash drives, the growing digital music player market, and the promise of a large mobile phone market will continue to dominate the non-Flash card based demand, with USB memory being the largest of the group with revenues of a little over $2 Billion in 2005.

The report indicates most flash memory makers, like Samsung, are switching much of their production to NAND chips from NOR Flash. NAND and NOR Flash are both "nonvolatile" for their ability to retain data even when they lack a constant supply of power. The difference is that NAND is faster and stores more data. As a result, it is becoming the mostly widely used type of flash memory.

"The shift from NOR to NAND has changed the Flash competitive landscape," the In-Stat report said.

Samsung has become a pivotal player in NAND chips, having overtaken Intel for the number one position in the combined NAND-plus-NOR Flash market. Intel does not manufacture NAND Flash, where Samsung manufactures both kinds.

Companies that havenit switched more than 40% of their production from NOR to NAND Flash and a large percentage of their DRAM memory production are starting to do so now, a report from the analyst firm IDC said Monday. As supply grows, IDC predicts supply will stay up with demand and prices will start to plummet quickly -- as much as 56% for NAND Flash chips this year alone.

The losers in lower prices will be the manufactures, who will still make money, but at a more subdued pace through 2008. The winners will be manufacturers at least for a while try as theyill try and maintain pricing for as long as possible and reap bigger profits, the report indicated. But as competition among makers of products like MP3 players lower prices, prices of products will fall and consumers will find more capacity at cheaper prices going into the 2005 holiday season.