Seagate Expanding to Cover More Enterprise Storage Options

Implications:  Seagate has stated that they will introduce a SSD device by the end of 2008 This is expected to be an enterprise level SSD to help protect the company’s position in the enterprise storage market There are several rumors that Seagate is looking at acquisitions to enable its SSD effort Intel is looking at extracting itself from its unprofitable joint flash venture with Micron Technology Seagate acquisition of a source of flash memory and flash memory IP could help it establish itself as a player in the emerging SSD market

Analysis: Seagate has stated that they will introduce their first solid state disk drive (SSD) product before the end of 2008.  This is likely to be an enterprise SSD that can help to maintain Seagate’s dominance in the enterprise storage market.  Although the initial market impact of enterprise SSDs may be to expand the market and take away market share from DRAM-based SSDs used for input/output (IOPS) intensive applications these products could eventually provide competition with some high performance hard disk drive applications which are IOPS-intensive.

The rapidly declining price of NAND flash memory and the increasing complexity of flash memory controller to enable better performance and reliability may help the technology make inroads into the high performance market.  It should be noted that the performance and reliability requirements for digital data storage applications are much more demanding than for consumer music, video and photograph applications where NAND flash is more often used for mass storage.  For computer applications there are significant complications in data integrity and error correction as well as interface and communication requirements that consumer flash applications have not had to deal with.

For this reason SSD companies are hiring hard disk drive electronics engineers to help them develop the controller firmware and hardware to give these products the capability of performing in the demanding data storage market.  This is also a reason why companies such as Seagate, already familiar with data storage drives, could do well in this market.  This is also a reason why Seagate may want to acquire IP and resources associated with flash memory companies.  There are rumors that Seagate is talking with STEC (who it has sued for using HDD interface technology in its SSD devices) and Intel/Micron Technology’s flash memory joint venture.  Combining internal device production, flash IP and Seagate’s hard disk drive channel and interface experience could help Seagate maintain their market position in the enterprise market and also give additional credibility to SSD in the enterprise market. 

Despite the promise of using SSDs in enterprise applications it is likely that unit sales of SSDs for many of these applications will not be high for some time.  One of the biggest applications would be to replace a large array of high performance hard disk drives with a few SSDs giving the same IOPS performance.  Thus the total unit sales of these SSDs will substract from HDDs but add only a fraction of the number of SSDs in their place. 

There is an additional additive market that would replace and expand expensive very high performance DRAM-based solid state disk drives that have been in the enterprise market for many years with NAND SSDs.  In any case SSDs in the enterprise will be expensive and unit demand will likely not be significant for some years to come even if the devices achieve technical success.  However these devices will be high profit margin devices and could add to participating company’s bottom line.