Semiconductors: iCloud benefits storage ::Macquarie Research,

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Semiconductors: iCloud benefits storage
Event
 On 6 June, Apple unveiled its much-anticipated iCloud service. iCloud is a
free service that will come with the arrival of iOS 5 this autumn (with some
services provided in beta prototype form now). This looks to be positive for the
storage industries, both solid-state and hard disk drives.
Impact
 There had been concerns that iCloud would be a music streaming service,
displacing on-device storage – which would be negative for NAND flash. An
example of such a service is Amazon's Cloud Drive and Cloud Player, which
allows users to store music in the cloud and stream it to multiple devices.
 Instead, iCloud can be seen as a synchronisation service that complements,
rather than displaces, on-device storage of content such as iOS Apps, music,
video, photos, ebooks and documents. Content is stored on-device to be used.
The role of iCloud is to ease the sharing of content across connected devices
(akin to the DropBox service/software). This can best be appreciated in the
case of photo synchronisation. iCloud only holds up to 1,000 photos taken
over 30 days. If users want to keep photos they will need to save it to their
Photo Roll or other folders on the device, be it iPhone, iPad or Mac/PC.
 As for music, this is purchased on iTunes, and stored both on the device and
in iCloud. This content is then also pushed to other devices include Macs/PCs
and Apple TV. Previously purchased content will also be downloadable to all
devices from iCloud. Apple pitches this as "New Purchases. Automatically
Everywhere" and "Your Past Purchases, Available on all your devices".
 For US$24.99 a year, Apple also offers iTunes Match, which allows access to
iCloud for music that has not been purchased from iTunes. This provides for
18 million songs for matching. Apple is marketing this against Amazon and
Google's cloud streaming services by touting the lower price compared to
Amazon's (US$50/year for 5,000 songs, US$100/year for 10,000 songs) and
the absence of any need to upload music into the cloud.
 We believe that by making it easier for consumers to have copies of the same
content (photo, videos, photos) across multiple devices, the net impact of
iCloud on consumer storage needs may be positive (on top of driving demand
for centralised datacentre storage). History suggests that when ease of data
interchange is increased and when cost/bit falls across technologies,
consumers’ total usage of storage bits increases. For example, the USB flash
drive was a breakthrough because it allowed large quantities of data to be
easily shared using a small portable device, and we think the resulting ease of
copying increased total quantity of data storage due to replication on multiple
devices. iCloud essentially does the same without an intermediate device.
Outlook
 We are positive on semiconductors. In the NAND flash sector, we have
Outperform ratings on Samsung Electronics (005930 KS, Won885,000,
Outperform, TP: Won1,300,000, Daniel Kim), Toshiba (6502 JP, ¥397,
Outperform, TP: ¥500, Damian Thong) andHynix Semiconductor (000660 KS,
Won27,650, Outperform, TP: Won42,000, Daniel Kim). Macquarie’s tech
team highlights that the cloud computing trend would also be positive for
relevantly-exposed firms, such as Hynix (server DRAM).