Will the cloud curb interest in 64GB iPad 2?

Many buyers may opt for less on-device storage

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 $92 on sites such as Pricegrabber.com.

Pricing for the iPad 2, which goes on sale March 4, begins at $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 $699. Models that offer both Wi-Fi and 3G connectivity are priced from $629 to $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 64 GB? 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 $600, which equates to the $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 $999 -- $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 [they charge for NAND flash memory] 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-in. MacBook Pro retails for $1,199. The most expensive 15-in. laptop runs $2,199, and the top-of-the-line 17-in model will set you back $2,499. If you want to add a 256GB SSD to those laptops, expect to shell out an additional $500 to $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.

Computerworld's Matthew Hamblen contributed to this report.

Lucas Mearian covers storage, disaster recovery and business continuity, financial services infrastructure and health care IT for Computerworld. Follow Lucas on Twitter at @lucasmearian or subscribe to Lucas's RSS feed . His e-mail address is lmearian@computerworld.com.

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