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hostage to the fortunes of SSD

"We can't afford NOT to be in the SSD market...

But don't ask how we're going to make money out of it yet.

(Or this year or next...)

Coz we're going to do it anyway.

(This SSD stuff)"


by , editor - July 3, 2013

This is probably what any big server, storage or chip company might tell you if they were being brutally candid and weren't too worried about what was going to happen to their share price when the statement hit the internet.

And it's what they might say if they really understood what was going on in the SSD market - which I can tell you from my own conversations and analysis - that very few people on the planet - without the same kind of crystal ball do seem to understand fully - although as a reader of this site - you're already much better placed than most.

But deceptively simple as my headline appears - it only tells part of one strand of a complex market disruptive story in which there are many plots, surprises and alternative endings - and which - like those classic Russian novels - contains many characters who seemed important at one stage - but whose name and role you can't quite remember when you've finished reading volume 3. (Not everyone who starts - ever gets to finish volume 1 - but somehow it became a classic anyway.)

here's how this SSD article started

I'm often asked questions like

"when is so and so SSD company going to be profitable?"

- or -

"why are so many companies piling into the SSD market - when even the leading enterprise companies haven't demonstrated sustainable business models yet?"

I was dealing with a variation on that theme in one of several reader questions yesterday. (When I reply to emails - as many of my victims can tell you - the replies can be as long as some of my articles - and contain even more typos.) But in trying to collect together 4 or 5 different themes in an email yestreday - it struck me that I could summarize a lot of what I'd just said in a single idea. Here its is.

Here's the real problem for the big companies.

They can lose tens of billions of dollars of revenue by not participating in the SSD market.

This market is at the stage of "we can't afford not to participate" rather than "we see clearly how to make money".

And at the same time - one of the pressure points is... this is a market where if you're clever and understand technology and how computers and storage work you can still build a multi biliion dollar revenue business from a small start.

That's where my email ended - and this was just going to be a quick note on this web page before the holiday.

But if that's got you wondering about the eventual ceiling of the SSD market (it's not a glass ceiling - more like a cloud ceiling) and who will get affected if they don't participate in the SSD market experiment I suggest you take a look at some of the articles I've already written listed in the SSD analysts page.

Some of these articles are very old. But they can still surprise those who haven't seen these messages before.

For example it's 10 years since I wrote that once the enterprise SSD acceleration market took hold in the user world - the big server companies would all need to sell SSDs - because they were going to sell 3x less servers - and no one was going to be impressed by the speed of a server which didn't have SSD acceleration.

Unlike old jokes - old SSD market models aren't always the best - even if some of them have surprisingly well withstood the test of time. That's why there are so many on this site (SSD market model related articles - not jokes - sorry.)

BTW - on a historical note - the company which did more than any other to change that old way of doing server business was Fusion-io.

Now whether a server company hates or loves FIO - they have all become hostages to the idea that they absolutely have to offer some kind of supported PCIe SSD style motherboad acceleration. They no longer have a choice in the matter.

Why?

Simple. If server makers stop offering SSDs - they'll sell even less servers - because users don't see why they should pay to get a slow server at a fast server price. But on the other hand if the server oem's favorite SSD supplier gets acquired by a server competitor - they're vulnerable from that direction - because their sales juice could get cut off. And they also need more than one type of PCIe SSD (the current flavor of server-side acceleration juice) to satisfy all those different use cases. So whether they like it or not - the server companies have been sucked into an SSD juice torrent where the only way they can stop drowning is to swim faster.

When it comes to enterprise storage. We're still a few years away from the pivotal point where 50% of enterprise storage on the SAN will be solid state rather than HDD based - but some of the products which will prove the new ROI metrics to users are already shipping - and the comparisons will get better next year - with better integrated SSD systems and software.

When it comes to the semiconductor companies - the original driving force for memory companies was they knew the time would come when due to the complex characteristics of flash memory in successive shrink generations - the only way to make a sellable product would to add a controller.

Owning the SSD brand (because users buy SSDs - not flash memory chips) is better business than selling commodity memory to SSD makers.

The current source of pressure for flash makers is that they all believe that a new type of memory design will be required in 2 -3 years to provide economic manufacturing at smaller cell sizes.

But they all want to delay the investment in new fabs (wafer fabrication plants) as long as possible until the new ways of doing flash memory (or any viable alternatives to flash) are proven one way or the other. That's why for the next few years - as they keep reminding everyone at investor conferences - SanDisk, Micron etc are planning their product mixes around a predictable amount of semiconductor wafers based on what they can do now with what they've got.

But that begs some questions.
  • How many SSDs can you make from a given known quantity of flash chips?
  • Which SSDs will sell for more?
  • How many of each SSD type can be sold?
You may think that sounds easy - but even the first question has many different answers - depending on your controller IP. (That's one of the reasons SanDisk bought SMART. For the details - see the SSD news page.)

What about chipmakers like Intel? - Well Intel doesn't make flash any more - so it hasn't got exactly the same pressure as a flash company. But the SSD pressure on Intel is acute for different reasons.

Remember what I said about users needing less server CPUs to get the same jobs done?

In the near term that's going to shrink demand for server CPUs. But more important than that - Intel - since about 1977 has seen itself as being at the heart of microprocessor based system design.

And for 3 decades most desktop computers and servers have been defined in relation to how they compare with Intel's processor architecture and related operating systems.

In the SSDcentric world - however - most of the dollars which a user will spend on silicon chips will be in SSDs - and managing the SSD assets will become the big focus of new software.

In that context the processor is irrelevant. All that software which Microsoft, IBM, Sun/Oracle, EMC etc have written around the concept of fetching and writing packets of data to hard drives and backing it up will become irrelevant too.

Intel risks being no longer be at the heart of the server design - in the same way as it missed out on the mobile phone market. The stuff which Intel has been doing in recent years with SSDs mostly confirms to my mind that the company still doesn't understand the strategic importance of SSDs. In the meantime if you want to know what the next Intel SSD looks like - just ask LSI (and others).

I could go on - but I won't - because this was just meant to be a brief note to say - thanks for reading and thanks for sending interesting questions which don't seem to have reliable answers.
.
hostage to the fortunes of SSD - footnotes
Editor:- September 12, 2013 - When I published the above article on July 3, 2013 - it had been inspired - like all my 无限彩票app下载 page blogs in recent years - by many conversations I had been having with SSD industry leaders and their investors and people in organizations well placed to acquire any SSD companies they wanted. (If they could satisfy themselves it would make sense.)

Underlying all these confidential conversations is a desire to get a better understanding of what has happened in the SSD market, what is happening now and where the SSD market is going. There are many different views about how to interpret the same things - as I've described in an earlier article.

In the months since writing "hostage to the fortunes of SSD" there have been acquisitions in the SSD market by some of the companies discussed in it. Therefore I've kept this blog alive longer than usual - because it helps you to understand the general kind of thinking that's driving these activities.

In my next blog I'll be talking about an upcoming market inflection effect I call the "SSD software event horizon" (which will dampen enterprise SSD revenue growth for a while in some segments - but is an adjustment which will enable growth towards a significantly larger SSD market in the very same affected segments soon after) and also another 4 key technology factors - which you have to take into account if you try to calculate how many SSDs will be needed to displace all hard drives in enterprise servers, SANs and the cloud. (And put your own date on when it will happen.)

The new article will also help improve the resilience of your own SSD market projections or expectations and it will also (I hope) give you the confidence to apply your own discount or scaling factors to adjust any other SSD market reports or predictions which you see elsewhere and to be aware of the flaws in them.
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Unlike before - today new companies entering the market can rely on a sophisticated SSD ecosystem - in which key elements of their solutions are already being supplied by other companies.
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We are now at a stage in the development of the SSD market - where even the dogs in the street know this is going to be a multibillion dollar market. The days of the "SSD deniers" and "SSD market entry procrastinators" are behind us.
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