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could enterprise SSDs become a $10 Billion Market?

classic article (2003) - by Zsolt Kerekes, editor

market sizing the architectural concept which I call - "SSD CPU Equivalence"

Can you trust SSD market data?
SSDs - reaching for the Petabyte
an introduction to enterprise SSD silos
what's the big picture message re SSDs?
5 User Value Propositions for buying SSDs
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could enterprise SSDs become a $10 Billion Market?

Editor:- August 2003 - I was recently asked by one SSD manufacturer for the original source for STORAGEsearch.com's frequently quoted editorial view that the Solid State Disk market could reach $10 Billion per annum. I am the source, and this article reveals my thinking and the evidence supporting that view.

Historical Data Which Supports the SSD Market Size Model

STORAGEsearch Reader Pageviews

There has been significant growth in reader interest in solid state disks. In Q1 2001 - SSDs were the 18th most popular subject. In Q1 2002 - SSDs were #4. In Q1 2003 - SSDs were #2. In Q2 2003 - SSDs were #1. That means more readers than viewed our NAS page for example. Clearly something has been happening in the market to accelerate reader interest. That was the first clue.

Our readership tracks the interests of hundreds of thousands of people who looks for storage focused content on the web. Our 11 year history as an IT directory publisher, strongly indicates that changing reader interest in subjects is a strong predictor of future market growth. It can take several quarters for that revenue to occur, and upto a year before it is reported by market research organizations which track revenue. But during 8 years of tracking these trends online in the Sun and storage markets, we know that the effects are real.

As a sanity check - consider that Serial ATA was the #1 product category on STORAGEsearch in the 2nd half of 2002 - clearly predicting future interest in a market, which at that stage didn't have many real shippable products. It's the changes in these rankings which are important. Some categories stay in the top 5 year after year. But when products get into the top 5 from relative obscurity, that signals volume changes are about to happen.

other Market Researchers?

There isn't any data being collected about SSD market size. Companies like Gartner track removable USB flash drives. But these flash storage modules aren't the same as true SSDs - and they exclude entirely DRAM based SSDs.

SSD Manufacturers

Many SSD companies have disclosed to us that their own revenue growth has been significantly higher than 100% year on year.


Looking Ahead - Market Trends - Which Supports the SSD Market Size Model

introducing a new concept in computer architecture - SSD CPU Equivalence

Our analysis at STORAGEsearch.com is that the correct market size for SSDs (used as server accelerators) is on the order of $10 billion The factors which will drive this are as follows

1 - users in the early adopter category have discovered that within their IT budgets they can increase application performance at lower cost by switching spend away from server CPUs over to SSD accelerators.

For example customers looking to upgrade heavily utilised 60 CPU Sun systems can choose between doubling CPUs by buying new servers or spending about 25% of that server cost on SSDs. Other users, lower down the scale, have been reported as taking servers out of use to reduce software costs, and using SSDs to make up the performance difference. Therefore the SSD accelerator market should be viewed as a replacement for part of the server CPU market. Not as a percentage of storage spend.

2 - Sun and others in the 64 bit server market have already seen decreasing returns in server performance with higher GHz CPUs. This trend will get worse when new generation Intel and Sun processors, which use more CPUs per chip come into mid range products. Future growth in server performance will not be possible unless server OEMs start to architect their systems to include SSDs as a standard option.

3 - Historically the SSD market has been limited by poor software tools. Users were unable to get promised speedups without extensive technical knowledge. Recent software tools from Imperial, BiTMICRO and others hold the promise that users or VARs can tune their own systems. Therefore sales ramps will no longer be limited by application engineer headcounts in the SSD companies.

4 - upto Q2 2003, the major server oems, IBM, HP, Dell and Sun have not been involved in any significant way in the SSD market. But when markets reach a critical size, the big companies will step in to protect declining server revenues. This will most likely start with the acquisition of SSD companies and OEM badge agreements. The effect will be that SSD technology will be marketed by companies which are more familiar to users than the SSD pioneers. These factors will accelerate the market growth and channels to market for SSD technology.

Conclusion

Extrapolating from the current market size, and with the potential to replace other products (such as server CPUs and application software licensing), it is reasonable to assume that the trends now seen in the SSD industry are part of a disruptive change in the computer market which could propel Solid State Disks into a $10 Billion Market by the end of the decade.
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The Transition Phase to a Disruptive Market in Solid State Disks
It's users who create disruptive markets, not product marketers. If enough users think that a new technology will fly - it will take off. Conversely there are many new products which marketers think are a good idea, but which fail in the market.

The high interest in SSDs on STORAGEsearch shows that a significant number of users (over 100,000) have been looking at the idea with interest.

The transition phase to a mass market will happen something like this...

Applications engineers in large server companies like Sun, HP and IBM will work with 3rd party SSD vendors in niche markets. Product marketers within the server companies will learn about the new technology and make it a standard "special" supported feature. Competitive pressure to improve the benchmark ratings of 64 bit multi processor chip based servers (like the SPARC IV) which have hit glass ceilings on Gigahertz bus rates will lead to an oem including SSDs in their basic server offering. This will double the published benchmark performance.

Within 3 months - every major server manufacturer will do the same. That's when the acquisitions and serious partnering with SSD companies will begin and we will switch to a mass market. Initially server companies will badge engineer SSDs. Eventually technology licensing and acquisition will mean that most will make their own. There will still be a non captive market for SSD companies as upgrades and working with smaller sever oems just as there is today with RAID controllers.

The process could be accelerated by flash semiconductor companies who will see SSD revenue as a way to make up for not having the processor crown jewels (that is not being Intel.)

This is similar to what happened with RAID systems which started out as niche add-ons in the late 1980s and took nearly a decade to become commonplace. The 2000-2003 US IT recession meant that users didn't go out and buy many systems that they didn't absolutely need - but the absence of a large visible market shouldn't be confused with indifference. many technologies including Disk to disk backup, iSCSI and SSDs were being evaluated or considered during this period and will change the landscape of the storage market in teh recovery. See article:- Storage Winners and Losers from the 2000-2003 IT Recession.

One factor which SSD product marketers have to remember is that users behave in a way which reduces their risk. Even if they like your technology they may not like the idea of buying it from your company. But they will feel more comfortable about buying your product if it's supplied by a company they trust - like a reseller they know - which is selling the product supported by the company which makes the user's server.
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Winners and Losers from a $10 Billion SSD Market?
It's hard predicting which companies will be the biggest winners and losers, when new technology disrupts high tech markets.

Currently most SSD companies are benefitting from these market trends, but many lack the marketing skills required to take advantage of a much bigger market:- development of software tools, VAR channels, branding etc. Some pure technology companies can only hope they get acquired, by the big server companies.

Intel will lose server CPU sales, compared to today's market patterns. But servers are only a small percentage of Intel's overall processor sales. On the plus side, Intel could stand to gain much more revenue from increased flash memory sales.

Microsoft, Oracle and other enterprise software companies will lose the most. Because users will deploy a lower number of server processors than they do today.

About half the number of processors could perform the same tasks in a typical organization, with the benefit of SSD and other network accelerator technology.