HDD-based storage or solid-state flash? According to the Apple Insider, Apple may just end up choosing the latter over the former by the end of the year.

An article on Apple Insider states that according to an "IT Hardware" report from Prudential Equity Group analyst Jesse Tortora, the move would pave the way for smaller form factor players, a more diverse model mix, and improvements to both battery life and durability.

"We believe that the video iPod transition from 1.8-inch hard disk drives to NAND flash memory may occur as soon as late 2007," Tortora wrote in the report. "Our checks indicate that Apple is considering canceling its next generation HDD-based iPod design, with the form factor refresh involving a move to NAND flash memory."

While flash memory can be more expensive on a $/GB basis, HDD-based storage can be quite susceptible to warping and other problems - problems that can happen more often due to the average iPod user's mobile lifestyle. Tortora also noted that the Nano's transition to flash in late 2005 "provides a guide as to the point at which the previously mentioned non-cost advantages of flash memory outweigh the cost premium."

The only remaining question that Tortora sees is whether or not 32GB contains sufficient capacity to store video content. "Apple currently offers 30GB and 80GB HDD-based models, and will have the option to increase storage capacity up to 120GB this year based on new perpendicular recording technology," he wrote. "While the higher capacities would allow for more video storage, we view battery life as the key consideration for a move to flash."

Tortora explained that replacing the hard drive with flash memory would allow for an increase of about 60 percent in battery life, extending a 30GB iPod's battery life to about 5.5 hour. An HDD-based 30GB iPod is sufficient for around 40 hours of video content, but only has about 3.5 hours of battery life.