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Flash Forward

Drives made of flash memory are popping up all over the place,in notebook PCs, digital music players and external storage devices.

They’ve gotten a lot of attention lately.

“The market hype is in near frenzy, stoked by countless industry announcements, falling prices of flash components and the entrances of big players,” said Joseph Unsworth, an analyst at Stamford, Conn.-based market researcher Gartner Inc.

Industry insiders refer to flash memory drives as “solid state” because they have no moving parts, which means they typically are smaller and more durable.

Traditional drives have spinning disks called platters, a needle-like reader and other chips and connecting parts.

Almost all PC makers now offer a solid state drive option on their computers. They include Lenovo Group Ltd., Dell Inc., Samsung Corp., Hewlett-Packard Co., Sony Corp. and others.

Apple Inc. made a splash a few months ago with the much-hyped release of the MacBook Air, a notebook that uses a solid state drive and is “as thin as your index finger.”

Western Digital disk drive: still has capacity, cost edge

Toshiba America Electronic Components Inc., an Irvine-based unit of Japan’s Toshiba Corp. that makes storage devices, recently upped the ante.

It announced a laptop that’s set to be sold in Japan with a solid state drive that holds 128 gigabytes of data. That’s big by solid state standards and is the largest such drive on the market, according to Toshiba.

Some industry players see solid state drives as a looming replacement for disk drives.

“Essentially wherever there is a spinning hard disk drive today a solid state drive can take its place,” said Brandon Stevens, senior technology manager for flash at Fountain Valley-based Kingston Technology Co.

Kingston, which buys flash to make memory cards that go into computers, cameras and cell phones, doesn’t make solid state drives.

But it’s looking into it.

“We are definitely playing in the game and researching,” Stevens said. “Kingston does best at a product when it starts to reach the mainstream.”

Kingston has said that flash memory is its fastest-growing source of sales.

It saw roughly $1 billion of its $4.5 billion in revenue last year come from flash.

Lake Forest-based Western Digital Corp., the No. 2 maker of disk drives, doesn’t see solid state drives as a threat.

“We’ve been looking at these things for a long time,” said Richard Rutledge, vice president of marketing at Western Digital. “We’ve never seen it have viability in the computing space in any way.”

There’s data to back him up.

The market for solid state drives is tiny compared to that of the disk drive industry. Gartner classifies solid state drives as an “ultra niche.”

For 2006, the most recent numbers available, $95 million worth of solid state drives were sold, or about 172,000 units.

That barely made a dent in the 435 million disk drives sold that year.

“The market growth for solid state drives will be measured in basis points this year,” Rutledge said. “It’s still seeing only very unique applications.”

Corporate Users

Solid state drives, which are more expensive than disk drives, have seen more acceptance among corporations than consumers.

The biggest reason,they can save a big company millions of dollars in energy costs, because they require less electricity to power up and run cooler.

And they’re pretty tough (just ask anyone with a dead video iPod, which uses a disk drive).

For those reasons, they’ve been used by the military and for industrial applications for many years.

Santa Ana’s STEC Inc. has been making and selling flash-based drives to the top makers of servers for more than a decade.

Its biggest customers are EMC Corp., IBM Corp., Cisco Systems Inc., Hitachi Ltd., Dell and HP, among others.

“They are all hard drive replacements in our customers’ high-end product lines,” said Pat Wilkison, vice president of marketing and business development at STEC. “Our customers’ customers are convinced that it solves some pretty important technical difficulties that hard drives will never overcome.”

STEC does about $200 million in sales a year. Roughly 60% are made up by flash drives.

When it comes to consumer devices, solid state drives get hung up mainly on price.

“While solid state drives have advantages such as performance, reliability and power efficiency, the need to drive down costs while maintaining quality will be a formidable obstacle for the industry,” Gartner’s Unsworth said.

Laptops with solid state drives are too expensive for the average consumer, Kingston’s Stevens said.

“Right now it’s pennies on the gigabyte for hard drives and it’s multiple dollars for flash drives,” he said. “It’s about five times more expensive for flash.”

Early adopters have been few and far between.

Such products might appeal to someone like a video game enthusiast, a graphic designer or what Stevens calls a “road warrior.”

“If the user has a job that’s fairly road-intensive and is in situations where they are likely to be hard on their systems, then they might be willing to sacrifice an extra couple hundred dollars for the peace of mind,” he said.

Crowded Field

A lot of companies are trying their hand at solid state drives.

Milpitas-based SanDisk Corp., the biggest maker of flash memory devices, is No. 1 with 33% market share, according to Gartner’s 2007 figures.

Western Digital looked into the market back in the late 1980s and had a hand in creating the first flash memory cards with the founders of SanDisk.

There are other local players besides Toshiba and STEC.

STEC’s former SimpleTech unit in Santa Ana, which was bought by San Mateo-based Fabrik Inc. for $43 million, has about 15% of the market.

Aliso Viejo’s SiliconSystems Inc. has about a 3% share.

Other big consumer names have gotten into the act, including Intel Corp., Samsung Corp., Micron Technology Inc. and Western Digital’s biggest rival, Seagate Technology LLC.

The jury’s out as to whether flash will come to dominate the storage industry.

Middle Ground

Most industry watchers take the middle ground and say that flash will be used for some tasks and disk drives for others.

“I don’t think that disk drives will ever completely go away,” Kingston’s Stevens said. “They can produce quick-and-dirty, large-capacity storage for cheap and they will always have a capacity advantage over solid state.”

Solid state drives are speedier at some things, such as retrieving certain types of information and booting up.

But they are more expensive and can’t hold as much data.

“Capacity versus cost doesn’t favor solid state,” Western Digital’s Rutledge said. “The economics really aren’t there.”

Disk drives are cheap and better at “writing” and storing big amounts of information.

“Under no circumstances does a solid state drive compete on writes,” he said.

Stevens is convinced that this year will show if there is a big enough market for both.

Gartner sees fewer than 1 million solid state drives sold this year, and double that in 2010.

“2008 will be the year of stamping these things out,” Stevens said. “The numbers are exponentially larger, but not earth-shattering.”

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