Samsung and Sandisk: Why now?

Implications: Besides consolidating the flash-memory industry, the merger will also help Samsung's foray into solid-state disk storage.

Analysis: Samsung has long been a small part of the hard disk drive (HDD) market, behind industry leaders such as Seagate (STX), Western Digital (WDC). A consolidation with Sandisk comes just as solid-state disk drives (SSD) are beginning to make inroads into the server market.

The server market is an important aspect of the HDD industry.  Big companies like Google (GOOG) buy millions of server disks every year.  Server drives run faster (10,000 RPM) and have smaller capacities than the more familiar desktop or laptop drivers, and because they are in giant "disk farms", power consumption is an important issue.

Solid state disk drives address many of these issues (they have no seek time and consume much less power) and are expected to soon become competitive with HDDs in the server market.

As an HDD vendor, Samsung already understands the interfaces that disk drives use to communicate with computers, and an alliance with SanDisk would enable its SSDs to be more competitive as well.

It will be interesting to see what HDD vendors do in response.  Seagate has announced it is developing solid-state drives, while WD continues to make its server drives faster and consume less power.

The battle between SSDs and HDDs is only beginning.