Simpletech sold the commercial business because it was a distraction, low profit and the inability to compete

Implications: 1. Simpletech has been "bogged down" by the commercial division of the company for several years. 2. The OEM/Industrial division (now known as STEC) has historically had healthy margins and niche products. 3. HOWEVER, STEC now faces competition from unlikely sources such as Super Talent, PQI, ATP, PNY and the return of Sandisk/M-Systems. This will drive down their margins and marketshare.

Analysis: Let's face it, the commercial division of Simpletech was never able to compete with the big 3rd party players in the memory industry. They did not have the buying power (DRAM and NAND) to service the highly competitive markets they were targeting (system builder, white box, reseller, etc). They had no niche and nothing to differentiate them from the rest of the market, except for their exceptional line of external HDD storage.

On the flip side of the coin, the OEM division of Simpletech (now STEC) has always had a niche and has a long standing business model comprised of servicing major OEM's and military customers with Industrial grade flash solutions. The market may not be as large as the commercial flash market, but the margins are worth the extra engineering effort and support required.

However, as more and more 3rd party players start to enter the SSD market and the Industrial Grade flash market, the margins of STEC will be driven down as will their market share. Sandisk will undoubtedly once again rise to be a major thorn in their side, since they have decided to reenter the Industrial-ish market since their acquisition of M-Systems. Simpletech picked up a lot of business when Sandisk exited the Industrial/SSD market a couple years ago, but will the opposite occur when all of these companies enter (and some reenter) the market space?