Will the cloud curb interest in 64GB iPad 2?

Lucas Mearian
9 March, 2011
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With consumers using the cloud service providers more often for their data storage, analysts are raising the prospect that iPad 2 buyers will look to save money by getting versions that have less on-device storage.

The trend of purchasing mobile devices with lower-capacity SSDs, or NAND flash memory on a board, is borne out among manufacturers. Many of the largest vendors have introduced lower capacity “value” models over the past year. Value SSDs retail for about $100, compared to 128GB or 256GB versions which can cost five times that amount. For example, Intel introduced a 40GB X25-V SSD that sells for for US$92 on sites such as Pricegrabber.com.

Pricing for the iPad 2, which goes on sale March 25, begins at US$499. For that, you’ll get Wi-Fi connectivity and a 16GB SSD—or to be more technically accurate, 16GB of NAND flash storage on a board. If you want to quadruple that capacity with a 64GB SSD, you’ll pay US$699. Models that offer both Wi-Fi and 3G connectivity are priced from US$629 to US$829.

“I’d consider the 16GB version [of iPad 2] and save myself some money, because so much data is not stored locally these says,” said Jude Olinger, the CEO of The Olinger Group, a market research firm based in New Orleans. “Why get a 64GB? With Pandora [streaming music service] and cloud services, I’m not using internal storage all that much.”

Olinger’s company deployed nearly 300 first-generation iPads last April for taking shopper surveys in dozens of retail malls. He wants to buy up to 20 iPad 2s, partly to use FaceTime video chat for connecting survey respondents directly to experts in the home office. Even for company use, it might not be necessary to have so much data stored on each device, he said.

“Even though we hear content is expanding exponentially … a lot of it’s not stored on the hard drive,” said Jim McGregor, chief technology strategist at market research firm In-Stat. “You can get to a point where SSDs just make sense, especially on mobile PCs.”

“Even digital home products like Apple’s new Apple TV switched from having a hard drive to just using a streaming model,” he added. “All the other home devices we’re seeing coming out are going the same way. You don’t have to store that information, you just have to be able to access it and buffer it. That’s a significant change over the past few years in the use of the cloud.”

According to Gregory Wong, an analyst with research firm Forward Insights, Apple tends to set the bar for mobile market storage capacity points. The iPad’s average selling price in the last fiscal quarter was US$600, which equates to the US$599 32GB model, according to Wong.

“I think people are buying based on the price point and not necessarily the capacity it has,” he said. “I think in general, people don’t know how much capacity they’re using.”

In fact, early mockups of the iPad 2 showed a 128GB model. But that may have proved to be too close to Apple’s MacBook and MacBook Air laptops.

Apple’s treading a fine line, Wong said, because the least expensive MacBook Air, with a 64GB of SSD, retails for US$999—US$300 more than the most expensive Wi-Fi-only iPad 2.

“If Apple were to double the capacity on the iPad, for one, the prices would have to come down quite a bit, and they’d have to consider how much overlap they’d have compared to the MacBook Air,” he said.

Apple makes a significant profit margin off of its SSD capacity. A good example of Apple’s pricing for SSD technology can be seen with its recent release of the new MacBook Pro.

An entry-level 13-inch MacBook Pro retails for US$1199. The most expensive 15-inch laptop runs US$2199, and the top-of-the-line 17-inch model will set you back $2499. If you want to add a 256GB SSD to those laptops, expect to shell out an additional US$500 to US$650.

While SSDs are still an order of magnitude more expensive than consumer hard disk drives, lower-capacity (64GB drives) can be had for an affordable $100 or so.

“They’re probably [NAND flash memory] cheaper than anyone else, so I think they’re making quite a bit on it,” Wong said.


3 people were compelled to have their say. We encourage you to do the same..

  1. Davo says:

    I’m inclined to think the iPad is the type of device that has stuff people actually want to carry around with them, and have available when they’re “out of reach”.
    From personal experience of travelling recently, 3G+WiFi coverage aren’t quite up to having your stuff in the cloud and accessing it whenever you want. Price as much as anything else is one barrier. WiFi costs far too much in remote locations, and rarely is up to scratch. Likewise 3G is quite expensive, and if you’re downloading rich media, you can wipe out the measly allocation in no time.
    Long term the situation will probably change. For the time being, it’s something to be thought about for the iPad 4.

  2. Dan says:

    I find it hard enough to even upload a bunch of 1MB photos from my iphone in to drop box then to get them from my drop box App on my iPad while on 3G. 3G is good for basic web surfing and emailing but that’s all. Moving 5 1MB file from the cloud to a iPad is not easy and no 3G provider, no matter how good the speed is, will be able to handle it if everyone did the same thing.

  3. Vena Santeramo says:

    great post, question about ipad 2 speaker mine isn’t very loud, anyone else have the same thing?

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