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SSD Vendors: Which Will Win?

As SSDs continue their march into the storage mainstream in both the enterprise and consumer markets, the SSD vendor landscape is starting to shake out. While some, like my friend George Crump on our sister site, argue that those with flash controller expertise hold the winning hand, I’d rather place my bets on the folks that run the flash foundries. Some established storage providers like Western Digital, Seagate and LSI may also have a leg up.

While there are more than 100 vendors hawking SSDs worldwide, most of them simply package flash from one of the four major flash foundries with a merchant flash controller like LSI Sandforce, Marvell or PMI/IDT. If you’re one of these packaging SSD vendors, you’re constantly in competition with your much larger suppliers, which, with the exception of SK Hynix, all sell their own branded SSDs using either their own captive controllers or merchant controllers with customized firmware.

Vendor 2012 NAND Flash Market Share
Samsung Electronics 36.9
Toshiba (SanDisk) 30.8
Micron-Intel 20.7
SK Hynix 11.4
Others (Spansion, Powerchip) 0.3

This problem recently struck consumer SSD leader OCZ, which announced that it will miss its first-quarter revenue targets. The company is projecting $50 million to $55 million in revenue vs. the $70 million Wall Street consensus estimate, and blames the shortfall on a “continued tight supply of NAND flash.” I find this interesting as I would expect a large customer like OCZ, which buys flash by the wafer and packages it in-house, to have long-term contracts to meet the majority of its requirements. In contrast, Samsung, Micron, SanDisk and Intel’s SSD division can count on a stable supply of flash.

[Read how one startup is using RAM caching instead of SSDs to accelerate NFS storage performance for vSphere hosts in "RAM Caching Vs. SSDs: A Startup's Gamble."]

OCZ has been moving into the enterprise market with SSDs in both disk drive and PCIe formats, most significantly the Z-Drive PCIe. In announcing that it would miss its Q1 revenue targets, the company said its enterprise sales were up to $25 million in the first quarter, or about half its sales. Like others in the enterprise SSD market, OCZ is trying to move from a component to a solutions sale; it acquired a caching layer when it bought Sanrad.

I’m also keeping my eye on Western Digital, which acquired sTec for enterprise SSD and SSD controller technology, and VeloBit, a supplier of caching software for Windows and Linux. I found those acquisitions a bit curious as Western Digital announced the sTec acquisition a week or more before the Velobit deal, and sTec’s EnhanceIO competed directly with VeloBit’s HyperCache. It looks like a vote of no confidence in EnhanceIO, but that could be overstating the case.

The one thing I know for sure is that there will be more consolidation in the enterprise SSD space. SanDisk has been on the prowl, and Seagate, while it's made a significant investment in Virident, may feel it has to do more to match Western Digital’s moves. The company also bought SSD controller startup DensBits a while ago; maybe that tech will come to life in something big.

If nothing else, all this consolidation activity this will make next month’s Flash Memory Summit in Santa Clara, Calif., more interesting. I’ll be there. If you have the inside scuttlebutt, I’d be glad to have a sit down.