Die Hard

Friday, August 21st, 2009
By Ross Rubin, Executive Director, Industry Analysis

Since 2005, Apple has held an event each September that has provided an update on the iPod ecosystem. Most of the rumors around the possibilities of such an event this year have been focused on an Apple tablet device. However, a secondary rumor has speculated that this year might mark the end of the line for the iPod classic, the most direct descendant of the original hard drive-based 5 GB iPod.

If Apple were to abandon hard drives completely, it could leave a gap in terms of capacity for those with large music libraries. Given the price-capacity ratio evolution of flash memory that tends to double every year, it would not be unreasonable for Apple to introduce a 64 GB iPod touch, but that would fall short of even the old 80 GB iPod classic, much less the current 120 GB version. Of course, Apple has been willing to cut capacity before, as the 120 GB model replaced a 160 GB iPod classic as its capacity leader.

Even if the iPod classic hangs on, though, shying from direct competition with the touch screen-based Zune HD, hard drives are fading from the portable electronics marketplace. While the spinning platters remain a staple in the line of Archos, which has focused on storage of large video libraries, hard drive-based portable media players now compose only 7 percent of the market, according to NPD’s retail tracking service.

Coincidentally, the rumor mill also hints that Apple will add a video-capable camera to its iPod touch as it has with the iPhone, putting the iPod in competition with inexpensive camcorders. While hard drives have been just another media format change for camcorders as opposed to being a key technology enabler as they were for iPods, camcorders represent another category that is transitioning from hard drives to flash memory. According to NPD’s retail tracking service, the percentage of camcorders with hard drives fell from 29 percent in 2008 to 23 percent in 2009. As in the MP3 player market, flash is encroaching from both the low-end (such as inexpensive iPod shuffle music players and Flip mino camcorders) and high-end (such as premium iPod touch media players and Canon Vixia camcorders) and consumers are voting for the thinner form factors, longer battery life, lower noise, and structural simplicity of flash memory.

Beyond mobile products, where gigabytes of flash memory aren’t lurking, the network is. Vudu, which like its product’s competitor Apple TV had a hard drive in its broadband movie delivery hardware, is leaving the component behind as it makes a bid for incorporation of its service directly into televisions and Blu-ray players. In that scenario, consumers will still be able to “buy” movies but will actually purchase the right to unlimited streaming of it on demand.

Hard drives will still play a digital entertainment role in the digital home beyond the PC. While Nintendo decided to pass on high-capacity hard drives for the Wii, they have been a key component of Microsoft’s and Sony’s videogame consoles. And flash memory cannot yet effectively compete with hard drives for use in DVRs such as those from TiVo, Digeo, and cable equipment suppliers. Even here, though, there is a potential threat from cloud-based DVRs such as those that Cablevision has won the right to deploy.

2 Comments

Other Links to this Post

1. Verbatim wants to have a word with your hard drive | Out of the Box — August 24, 2009 @ 10:32 am

2. iPods For Less » Npd Group Blog » Die Hard — September 4, 2009 @ 7:50 am

RSS feed for comments on this post. TrackBack URI

Leave a comment