Originally Posted by BRussell
So iPhone capacity is going to stay where the iPod touch is right now for 2 more years? I find that very hard to believe.
Flash chips are semiconductor chips and therefore follow the basic "Moore's Law" of doubling in density every 18-24 months. It'll go faster since flash memory circuits are a whole lot simpler than CPU logic circuits, but not that much faster; maybe 12 to 18 months. Currently, the iPhone board design reserves enough room for 1 SD card sized flash package. At current densities, 16 GB is possible and affordable.
64 GB is 2 doublings in density. Flash storage makers won't get there (4x increase in density) for another 2 years at least.
Apple can get around it by reserving more board space for a second SD card size flash package, in which case, they can ship a 32 GB iPhone in the Summer and a 64 GB one next year in 2009. It'll come at a cost as that phone would be a little thicker. This is on top of the 3G baseband circuitry generally requiring more board space than 2G ones. Something has to give or some other thing has to get smaller to free up the volume.
Heck, they could ship a 160 GB version now using a 1.8 drive, but it'll be a pretty big device.