The prohibitively expensive solid-state version of Apple’s MacBook Air is suddenly 16% less so.

While Apple watchers were focused on the upcoming launch of the iPhone 3G, the company quietly lopped $500 off the 64-GB SSD MacBook Air, reducing it overnight from $3,098 to $2,598.

The price cut, just six months after the product was introduced, is at least partly the result of Apple’s transition from expensive single-level cell flash to multi-level cell technology (see here) and steadily falling NAND flash memory prices across the board. But it may also reflect increased competition in the thin notebook market and sluggish sales for the driveless version, which hasn’t quite delivered either the speed or power savings customers had expected.

Kudos to AppleInsider’s Slash Lane, who seems to have been first to note the price cut with a post published at 1:00 p.m. ET.

Special mention to MacRumors‘ Arnold Kim, who caught Apple (AAPL) doing the right thing for customers who ordered the Air at one price and will receive it at another:

To Our Valued Apple Customer:

Apple has announced a price drop for a component(s) of the MacBook Air that you recently ordered. We have automatically adjusted your order to reflect the new lower price.

For up-to-date information on your order, please visit our Order Status website at . After your order is shipped, you can also obtain tracking information on this site.

Thank you for your shopping at the Apple Store.

Sincerely,
Apple Online Store Support (link)

What is Steve Jobs waiting for?

It’s already April, and Apple has yet to start making large-scale purchase orders for NAND flash memory for 2008, according to a report issued Monday by iSuppli Corp. By this time last year, Apple had already ordered huge quantities of the stuff.

Apple (AAPL) looms large in the NAND flash market. According to iSuppli, it is the world’s third-largest OEM buyer of NAND flash, which it uses in iPods, iPhones and solid state disk drives for the MacBook Air.

Based on the lack of new large-scale orders — and on a February iSuppli report that Apple had “slashed” its expected 2008 flash growth forecast — iSuppli cut its own forecast of revenue growth for NAND flash memory this year by about two-thirds on Monday. iSuppli had previously forecast NAND revenue to rise 27 percent to $17.9 billion. It now expects revenue reach $15.2 billion in 2008, up only 9 percent from 2007’s $13.9 billion.

iSuppli had earlier predicted that Apple’s spending on memory would jump 32% this year to $1.6 billion. The firm now projects the company’s spending will increase only 12% to $1.4 billion in 2008, up from $1.2 billion last year.

iSuppli’s February report of “slashed” orders had surprised Apple watchers and didn’t help its share price, which had dropped 60 points from its December high of over $200 per share.

But the market seems to have shaken off iSuppli’s latest report, perhaps because demand for Apple’s products is so high. Apple can’t make iPhones fast enough to supply demand in the U.S. (see here) and interest in the next-generation 3G iPhones seems to grow every week. Meanwhile, Apple’s MacBooks are moving briskly and even iPods sales, which had slacked off, have picked up in the wake of the shuffle’s February price cut.

If Steve Jobs plans to sell 10 million iPhones in 2008, let’s hope he’s got the flash to put in them.

News out of overseas chip factories this week cuts both ways for Apple (AAPL), the world’s No. 3 buyer of NAND flash memory.

The report getting the most attention — and stirring the most controversy — is the one published Wednesday by iSuppli Corp. Based on what chip makers are telling it, iSuppli is cutting its outlook for revenue growth in NAND flash memory (the chips used in MP3 players and USB drives) from the 27% it had expected for 2008 to “single digits.”

“NAND suppliers are likely to go into the red in the first quarter,” warns Nam Hyung Kim, iSuppli’s chief memory analyst, “and are not likely to recover in the second.”

Grim tidings for the chip makers, no doubt.

The controversy comes from what the iSuppli report had to say about Apple’s role in the shortfall:

In an early warning sign of consumer weakness, Apple Inc. has slashed its 2008 NAND order forecast significantly and has informed suppliers that its demand growth will slow in 2008 compared to 2007, according to iSuppli sources. … Before word of Apple’s warning, iSuppli had predicted the company’s NAND flash purchases would rise by 32.2 percent this year, helping drive significant market growth. (link)

Sounds pretty ominous, and the paragraph may have played a role in shaving a couple points off Apple’s share price on Thursday.

But several commentators have taken issue with the use of the word “slash” to describe Apple’s order forecast. As Tom Krazit at CNET points out, Apple’s demand for flash is still growing rapidly, despite the broader slowdown in consumer spending. In fact, by his calculation, Apple is still planning to purchase 27 percent more flash memory this year than last year — just not the 32 percent iSuppli had expected.(link)

[UPDATE: Krazit now says that his calculations were wrong. "This was an error on my part," he writes in a corrected blog. "The 27 percent increase in flash memory spending in 2008 was iSuppli's previous expectation for the global market, not the revised expectation for Apple's spending. Right now, iSuppli doesn't have an estimate of how much Apple plans to spend on flash memory this year, and won't until more data becomes available."]

Moreover, what’s bad for memory makers may actually be good for Apple. Chip prices were already plummeting (4GB flash memory fell more than 73 percent since last August, according to IDG), and a memory glut could drive them even lower. As Richard Hyde writes in Seeking Alpha:

Here is where the story gets interesting for Apple. Not only do they reap the benefit of huge decreased pricing, the difference between the 8GB and 16GB modules is only $11, even though the iPhone models differ by $100. Similar savings are seen in the 16GB and 32GB iPod touch. (link)

No wonder Apple can afford to cut the price of the iPod shuffle from $79 to $49. If it wanted to drive up demand, it could probably afford to cut prices all across the iPod and iPhone product lines.

Below the fold, iSuppli’s breakdown of the chip makers’ NAND revenue market shares for 2007.