Waves of Opportunity

by Woody Hutsell at www.appicu.com

The next big opportunity/threat for SSD manufacturers is playing itself out right now. SSD vendors are scrambling to be a part of this next big wave. The winners are your next acquisition targets or companies poised to go public. The losers will hope that this new wave expands the overall market just like the first wave.

The first big wave in the enterprise SSD market was the rapid adoption of hard disk form factor SSDs for use in enterprise storage arrays. The SSD companies most seriously contending to ride this wave were BitMicro and STEC. STEC, by virtue of their GnuTek acquisition, had the right product at the right time and were able to win early business with EMC. Suddenly, venture money was pouring into the market and any company that had ever put a Flash chip on a board was selling Flash disk drives. The clear winners in this category have been STEC, who continues to have great revenue growth, and Pliant’s investors who have successfully sold their company to SanDisk after getting some traction with the OEM community. The story in this market is not finished as companies like Western Digital, Seagate, LSI and Intel look to chip away at this part of the business. At the same time though, a few companies were swept out to sea and others saw their golden opportunity for enterprise riches turn into dreams of big volumes (but low margins) in consumer markets. As I have argued before, the use of Flash hard drives in enterprise arrays is really about accelerating infrastructures more than about accelerating a specific application. This first big wave actually increased opportunities for all SSD companies by increasing the market size and validating the technology for mainstream use.

The newest wave to entice and yet concern SSD manufacturers is hitting closer to home for those manufacturers focused on the application acceleration market. For many years, the data warehousing sector has led to some great success stories for companies like Netezza who tightly bundled database functionality with hardware. Netezza’s success led Oracle and HP to try Exadata which was anything but a rousing success in the market. But somewhere along the way, Oracle was watching what Sun was doing with solid state storage and noticed a way to take the relatively less exciting Exadata and turn it into something much more captivating and yet similarly named Exadata 2. Some day we will learn whether the prospects of Exadata 2 were a big motivator for the Sun acquisition or just a quick way to demonstrate that Oracle was serious about the hardware market. Either way, Oracle’s claims of big margins and big potential revenue streams for Exadata 2 have ignited a flurry of activity in the market. Already vendors are clamoring to get into this space and there is a series of speed dating exercises going on as database vendors, server vendors and SSD vendors start trying to find some magical combination which helps them beat Oracle at this new market. Will the rich SSD vendors get richer still in this category or will the remaining SSD manufacturers find new partners, buyers and OEMs? Can any combination beat Oracle?

Whoever the winners, this second wave will show more clearly the ability of a tightly integrated solid state storage solution to increase application performance.

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