This won’t be a form factor for everyone. Anyone that frequently finds themselves in areas where they are disconnected from the cloud (such as in poor cellular coverage areas or on planes) will want to keep a robust local storage component in their phone. But many people travel little and enjoy nearly ubiquitous strong network coverage. For this large group of potential customers the iPhone Nano would be very compelling.
There is one point that should be made very clear, however. Apple is not considering removing DRAM from the phone. DRAM will actually become even more critical as it will have to serve a larger buffer role as more data is streamed from the cloud. While this new device from Apple might be a bane for NAND, it will likely be a boon for DRAM.
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