Semiconductors and Components

In Repeat of 2012, Solid State Drives Can Expect Strong Prospects

20 January 2013

Solid state drives (SSD) will remain a bright spot in the storage industry for 2013, with robust growth predicted this year as markets continue warming to the technology even if Ultrabooks have faltered so far, according to an IHS iSuppli Storage Space market brief from information and analytics provider IHS.

SSD revenue this year is forecast to reach $10.7 billion, up a resounding 53 percent from $7.0 billion in 2012. The projected increase this year follows a near-similar rate of expansion in 2012, when revenue shot up 52 percent from $4.6 billion in 2011. The industry will continue to enjoy double-digit expansion in the next three years, with revenue amounting to $20.7 billion by 2016.

The SSD revenue takings for the forecast period cover traditional solid state drives in both the consumer and enterprise segments, as well as cache SSDs that along with a hard disk drive (HDD) component make up a composite storage solution such as that found in Intel Corp's Ultrabooks. Not included is revenue for hybrid HDDs, in which the NAND component lies inside the hard drive.

Several reasons account for the upbeat mood this year on SSDs, which can serve as an alternative to hard disk drives in personal computers, storing data by using NAND flash memory semiconductors rather than by employing traditional rotating media.

One of the more influential factors is that average selling prices for NAND flash memory have come down, in the process establishing new price expectations. The lower prices are attracting deal-seeking consumer enthusiasts, as well as an increasing number of PC manufacturers that are now more willing to install the once-costly drives into computers. A second reason is that the newest wave of Ultrabooks loaded with Windows 8 has started to generate enthusiasm, with the superthin computers likely to pick up more steam this year, boosting SSD prospects further. Finally in the enterprise sector, SSD use is growing thanks to product introductions from major vendors and startups alike.

The steady growth of SSD revenues means that the market will be equivalent to more than half the size of the HDD industry by 2016. Even so, there's more room to grow, IHS iSuppli believes. As NAND rides out variable cost and scale curves in ever-more efficient lithographies, such things as solid-state PCs, servers and storage arrays become more achievable and attainable. Recent developments around non-volatile memories like STT-RAM and resistive RAM also hint at sustained performance improvements for SSDs beyond the drives' current use of NAND flash memory.

One sore point for the SSD market has been the paltry sales of Ultrabooks, negatively impacting the flash memory prospects of solid state drives (SSD) used in the superthin computers. While Ultrabooks have had some success penetrating into the consumer computing experience, adoption overall has been underwhelming, and the incremental increase to demand has been significantly below expectations. Such developments have tempered SSD growth, which could have been even more dramatic if the Ultrabook market had taken off as initially hoped.

For SSD manufacturers, their fortunes this year will depend on how well they align with market trends. The emerging cache SSD space, for instance, will support smaller companies like Lite-On and Kingston Technology. Meanwhile, as original equipment manufacturers for enterprise storage systems expand and refine in-house flash technologies, growth will slow for companies like Fusion-io with proprietary SSD solutions of their own.

Still to be answered as companies reposition their offerings in the value chain are questions about application segmentation and brand differentiation.

The jury is out, for instance, on whether SSDs will be able to continue their rapid price decline, and whether this would be achieved via cuts in costs, margins, or improvements in manufacturing scale. The impact on SSD technology of new interfaces, such as NVM Express, SCSI Express and even mobile-focused UFS, will also have to be assessed. And in the vast, untapped realm of the enterprise market, the battle will rage between storage vendors capitalizing on recent acquisitions in a show of strength and mighty resources, against aggressive startups with nimbler footing and quick pivoting strategies.

Regardless of the outcome, rapid growth for SSDs is expected moving forward, especially as Ultrabooks and cache SSDs finally start catching on with consumers, IHS iSuppli predicts.


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