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SanDisk upgraded on NAND flash-based video iPod rumors

post #1 of 17
Thread Starter 
Shares of flash-memory maker SanDisk rose over 1.3 percent on Tuesday after one Wall Street analyst said Apple Inc. is working on two new NAND flash-based video iPods that should help strengthen pricing in the overall flash market during the second half of the year.

"Our research suggests Apple is in the process of coming to market with 16GB and 32GB iPod Video solutions based on NAND flash," UBS analyst Alex Gauna wrote in the firm's second iPod-related research note of the day. "By our calculations, this eventuality, coupled with the Apple iPhone ramp and modest further inroads by SSDs, should swing the NAND supply/demand equation back towards, but not into equilibrium."

For calculative purposes, Gauna is modeling the Cupertino-based iPod maker to ship 2-3 million iPhones and 3-5 million flash-based video iPods during the second half of the year, which he believes will close NAND oversupply from a 7-9 percent risk to a 2-4 percent risk. The end result, he added, will be some NAND price firming towards the second half of the year followed by some weakness in early 2008 -- a similar patterned experienced in late 2006 to 2007.

The analyst's comments are in line with those of a recent AppleInsider report, which revealed that Apple's sixth-generation video iPods are tracking for release during the third quarter and that the company was anticipating a switch away from hard disk drives (HDD) and towards solid state drives (SSD) based on NAND flash.

As noted in the AppleInsider article, a video iPod employing 32GB of NAND flash would pave the way for slimmer, sleeker players with significant improvements in battery life over current HDD models.

In his note to clients, Gauna noted that his checks suggest OEM exploration of NAND SSDs is proceeding with Apple, Dell and HP all in a position to announce NAND-based sub-notebooks or ultra portables later this year. However, he said it's unlikely those devices will hit price points that can drive broader adoption until 2009 and therefore the immediate effect on the 1.8-inch HDD market will be limited.

"On the NAND front, 4GB and 8GB iPhones, coupled with the potential for 16GB and 32GB NAND-based iPod Video players, have the potential to swing the NAND industry back towards supply/demand equilibrium in 2007," he wrote. "While the implications are negative for 1.8" form factor hard disk drives, we believe new storage demand created by iTunes and similar business models, makes for a healthy HDD market in total and we see only modest potential for NAND SSD penetration into the 2.5" and 3.5" HDD markets."

According to the UBS analyst's calculations, a 32GB version of Apple's video iPod, with the ability to hold some 40 hours of video, would need to command a price point of $399 to reach acceptable margin levels for the consumer electronics maker.

"If we consider that current iPods with the ability to play video retail at $249 and $349 price points, and could move to $199 and $299 levels with normal Apple pricing cuts, we believe it is possible that Apple could keep its flagship iPods in the market at these more moderate price points as it ramps a new video version at higher ones," he explained.

Gauna upgraded shares of SanDisk to a Buy from Neutral with a new price target of $53 per share.
post #2 of 17
It's funny how AI quotes the analysts, while the analysts, in part, quote AI, et al, in their 'research'.
post #3 of 17
Quote:
to ship 2-3 million iPhones

This is very conservative. If my pesonal experience is any indication, the iPhone will probably exceed demand (and Apple's own conservative forecasts). What do I mean by personal experience?
1. The high school students where I work are constantly talking to their friends about who is getting one (many of them are not mac users). 2. The same thing is going on at my university.

Hell, I'm even getting one eventually (2nd gen) and I don't even need a phone (currently tied down to a Razr/with T-mobile). The iPhone makes my Razr look like an obsolete POS.
post #4 of 17
Quote:
Originally Posted by gordy View Post

It's funny how AI quotes the analysts, while the analysts, in part, quote AI, et al, in their 'research'.

Welcome to Fantasy Island!

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Proud AAPL stock owner.

 

GOA

 

Get the lowdown on the coming collapse:  http://www.cbo.gov/publication/45010

Reply
post #5 of 17
By my reading, this is all speculation based on the likely mass availability of 16GB and 32GB NAND in the near future. Obviously, if Apple can put out an iPhone/iPod product with NAND, they can just as easily put out one without the phone and with more memory.

The real issue is whether Apple wants to market a video iPod alongside the iPhone or just ride the iPhone for a while.

Isn't it possible that the 16GB and 32GB NAND is to bump the nano from 2/4/8 to 8/16/32 without the introduction of a widescreen iPod? I mean, after all, the iPhone IS the widescreen iPod.

I think there's eventually going to be a widescreen iPod apart from the iPhone, but why would Apple want to come out with it 3Q and compete with its own product launch of the iPhone?

I think Apple's year will lay out something like:

* Leopard preview event in April, shipping in May;

* iPhone launch in June;

* an October release of a single 32GB widescreen iPod for $399 along with more movie studios in iTunes;

* a 2G iPhone and a TV subscription plan for Apple TV at Macworld in January '08.

We're due for iPod refreshes and a Beatles announcement, so maybe we'll get a one-off music event somewhere along the way. It's going to be a fun year!
post #6 of 17
Upgrading on a rumor?

Apple contracts with something like five flash IC makers, and they can probably have anyone else solder together modules for them if they like. They probably don't need a controller chip, the ARM chip can pretend to be one if they like. I think this is what they do with the nano, the central chip on the nano does the work to make the computer think it's a hard drive. I don't see why SanDisk would be the only beneficiary of an upgrade.
post #7 of 17
I don't see how the widescreen iPhone is the widescreen iPod. Certainly they are substitutes since one involves a cost increase, phone, and the corresponding phone servce (from cingular), while the other is a music player. I don't think they will compete against each as the serve different market niches.
post #8 of 17
Quote:
Originally Posted by gordy View Post

It's funny how AI quotes the analysts, while the analysts, in part, quote AI, et al, in their 'research'.

Once again we have the infinite loop and Circular logic...
post #9 of 17
Sorry, the person who thinks the iphone is the vPod is wrong. There WILL be a discrete, wide screen, video ipod. Additionally, the switch to solid state drives is inevitable, but there isn't a chance apple is getting rid of the 1/8 any time w/in the next year. Apple will upgrade the Nano to 32, give it a wide screen, and they will drop the low end HDD Video. The wide screen Nano"W" will take the 249 price point. As for large capacity "Flagship" players, apple will introduce a full screen 120g video ipod several months (Holiday Season) into the iphone ramp. Trust me, I know.
post #10 of 17
Quote:
Originally Posted by JeffDM View Post

Upgrading on a rumor?

Apple contracts with something like five flash IC makers, and they can probably have anyone else solder together modules for them if they like. They probably don't need a controller chip, the ARM chip can pretend to be one if they like. I think this is what they do with the nano, the central chip on the nano does the work to make the computer think it's a hard drive. I don't see why SanDisk would be the only beneficiary of an upgrade.

Sandisk doesn't actually sell to Apple. But it would benefit (like other NAND-flash makers) because, like you said, NAND-flash has essentially become a commodity product that more or less anyone with the right equipment can made. Sandisk's problem of late has been a general oversupply in the flash market (since fall '06, when Apple didn't upgrade the capacity of the 4gb nanos to 6gb, like had been expected). Apple sucking up more flash, though, would lead to higher flash prices.
"In Xanadu did Kubla Kahn a stately pleasure-dome decree."
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"In Xanadu did Kubla Kahn a stately pleasure-dome decree."
Reply
post #11 of 17
Maybe they'll use this for that touch-screen iPod we've been waiting for. Undoubtedly, the touch-screen would take more power, and the use of flash could probably solve battery life issues.
post #12 of 17
I posted this in the "Mega Platform" thread. They upgrade the stock because its beneficial to there position in the market.

"We know nothing about Leopard, but if we mention (to the right people) that it will be out in March, we can push, manipulate the market"

Look at how much secrecy surrounded the iPhone, analysts were guessing left and right. They were no better at predicting what capabilities the iPhone would have than many people on this forum.

Watch this video by Jim Cramer, former hedge fund manager. It explains all.

http://www.youtube.com/watch?v=708wDFX28lc

Here's a rumor about an multi-touch iReader. "UBS upgrades Apple stock as research suggest that new multi-touch technology will make its way into Apples first iReader. "We believe given the high demand for portability coupled with a multi-touch and flexible displays, Apples first foray into the ereader market is at hand. With its unparalleled success in the music market, Apple has gained the confidence of the publishing industry by ensuring tight drm managment and flawless integration with its new iReader. Our sources tell us the new iReader is astounding, utilizing flexible display and color, its the new way to read your old favorites" UBS analyst Alex Gauna wrote.

Don't let me down Alex
post #13 of 17
Quote:
Originally Posted by restheo View Post

I don't see how the widescreen iPhone is the widescreen iPod. Certainly they are substitutes since one involves a cost increase, phone, and the corresponding phone servce (from cingular), while the other is a music player. I don't think they will compete against each as the serve different market niches.

Until an actual widescreen iPod is released, the iPhone IS the widescreen iPod. One of Apple's key selling points for the iPhone is that is a widescreen iPod. Just go the iPhone website and you'll see that iPod is listed even before Phone in the list of functions at the top.

And I keep fearing that Apple will hold off releasing an iPod-only widescreen/touchscreen device until sales of the iPhone level off.

As for the widescreen iPods only being available with 16 or 32GB of Flash RAM, that seems like a huge mistake. For anyone with a 60GB 5th gen (like me) or an 80GB 5.5 gen, it would feel like a downgrade. The advanced control scheme the touchscreen provides is really nice but the math of buying a 32GB iPod for $399 vs. an 80GB 5.5gen for possibly $299 doesn't add up to me. I'm hoping they don't abandon those who want larger capacities. My current iPod plays audio for well over 8 hours on one charge so unless the power consumption of the touchscreen is massive and would drop it to less than 8 hours of audio, I really wouldn't see any benefits of the Flash RAM (except the higher cost and lower capacities which are hardly benefits).
post #14 of 17
Quote:
Originally Posted by caliminius View Post

As for the widescreen iPods only being available with 16 or 32GB of Flash RAM, that seems like a huge mistake. For anyone with a 60GB 5th gen (like me) or an 80GB 5.5 gen, it would feel like a downgrade. The advanced control scheme the touchscreen provides is really nice but the math of buying a 32GB iPod for $399 vs. an 80GB 5.5gen for possibly $299 doesn't add up to me.

That math probably doesn't consider the durability difference. I've seen the ipod hard drives fail too often. One was my fault from too many drops, others were not dropped. I think a flash-based unit would fix that. My nanos have been holding up a lot better. I'm not convinced that the iPods have enough shock resistance, it's just a very thin foam pad. I don't think it's enough for a portable device.

At any rate, I think it was TenoBell (sorry if I remembered the wrong person) that suggested a 32GB flash iPod and an 80GB (or larger) hard drive ipod just to keep everyone reasonably happy. Then it would be a question of whether Apple's cost of the flash chips are low enough (probably has to be near $2/GB, their cost) and if the cheap flash chips are compatible with putting a big array on a tiny card.
post #15 of 17
Quote:
Originally Posted by restheo View Post

I don't see how the widescreen iPhone is the widescreen iPod. Certainly they are substitutes since one involves a cost increase, phone, and the corresponding phone servce (from cingular), while the other is a music player. I don't think they will compete against each as the serve different market niches.

I agree. There is a market for both an iPhone and WS iPod. Because of the disparity between 8 gigs of memory on the iPhone and 60 gigs (soon to be more) on the WS iPod, they will serve different users. Not to mention one is an expensive cell phone with an expensive 2 year contract and the other is NOT!
post #16 of 17
Quote:
Originally Posted by caliminius View Post

Until an actual widescreen iPod is released, the iPhone IS the widescreen iPod. One of Apple's key selling points for the iPhone is that is a widescreen iPod. Just go the iPhone website and you'll see that iPod is listed even before Phone in the list of functions at the top.

I really hate to beat this subject to death but it really isn't. The products have very different attributes (8gb v 60gb) and different prices (the price differenceis drastic if we consider the price per gb). If prices are thought of in this way there is a huge price differential which is attributed to the phone, internet browser, calendar, camera, etc. Thus if someone is just looking for a music player / video player with a widescreen they probably won't want to pay for an iPhone. Unless of course they are so impatient that they are willing to pay much more per gb of space, only to have an widescreen sooner.

Conclusion: Upgrade the iPod too and cover all the market bases as the overlap between iPod market and iPhone market is not as great as caliminius makes it sound.
post #17 of 17
Quote:
Originally Posted by restheo View Post

I really hate to beat this subject to death but it really isn't. The products have very different attributes (8gb v 60gb) and different prices (the price differenceis drastic if we consider the price per gb). If prices are thought of in this way there is a huge price differential which is attributed to the phone, internet browser, calendar, camera, etc. Thus if someone is just looking for a music player / video player with a widescreen they probably won't want to pay for an iPhone. Unless of course they are so impatient that they are willing to pay much more per gb of space, only to have an widescreen sooner.

Conclusion: Upgrade the iPod too and cover all the market bases as the overlap between iPod market and iPhone market is not as great as caliminius makes it sound.

I didn't say the markets for these two devices overlap in great quantities. All I stated was until an actual iPod is released that is widescreen, the iPhone is the de facto widescreen iPod. All of Apple's advertising is also clearly targeting the iPhone at iPod users for use as an iPod. Their advertising thus far has clearly not targeted users of other smart phones. Apple clearly wants those using other mp3/music playing cell phones to grab an iPhone and maybe iPod nano users as well. It seems their intent to make the markets overlap. I fear that in the process, the true non-phone widescreen iPod might be held hostage.

If they removed just the phone portions, left in the wi-fi internet/email, and slapped a 30 or 80GB HD, it would be a great mobile device without a contract.
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