?e dominate this market. There? no one in the same hemisphere.?
STEC Inc. Chief Executive Manouch Moshayedi is fond of sweeping, bold pronouncements. But it? hard to argue with him on this one.
Santa Ana-based STEC enjoys a rare position for a technology company these days: a near monopoly.
The company? hold is on an emerging market for drives that insiders call ?olid state?because they have no moving parts.
Last year, STEC rolled out a line of solid state drives that are set to be built into servers made by EMC Corp., Hitachi Data Systems Corp., Sun Microsystems Inc. and others. It also recently announced design wins with IBM Corp. and a unit of Fujitsu America Inc.
Analysts see more deals on the horizon.
?e continue to believe that STEC remains in the driver? seat with a significant lead in enterprise solid state drive solutions,?said Richard Kugele, an analyst at Needham & Co. in Boston. ?eyond the company? solid supply relationship with EMC, many additional tier-one customers are far from their potential in terms of production shipments, leaving us (with) the expectation for more material growth later in 2009 and into 2010.?
Right now, STEC is the only game in town for solid state drives, which are seen as eventually replacing traditional disk drives as the primary storage devices for companies.
Server makers are attracted to solid state drives because they typically are smaller, more durable and require less electricity to power up and operate, making them ideal for end users that need to keep and serve up lots of data.
Early adopters include government agencies, insurance companies, trading services, freight companies and other financial institutions.
Some potential competitors have entered the fray in the past year, including Lake Forest? Western Digital Corp. and Fountain Valley? Kingston Technology Co.
Scotts Valley-based Seagate Technology LLC also is rumored to be developing solid state drives, but hasn? made any big announcements.
Moshayedi is undaunted. He maintains that STEC has a three-year lead on the other guys.
?o say that they are competing with STEC is really a misunderstanding,?he said. ?e don? have a direct competitor today. We?e got the five customers worldwide that we went after. Basically, we have all of our target customers.?
Mark Moshayedi, chief operating officer and Manouch? brother, is equally bold in his statements.
?e see in the next three or four years flash drives from STEC and others wiping out the whole hard drive industry for high-end storage,?he told the Business Journal last year. ?he biggest guys in the industry are forced to follow in our footsteps instead of us following them.?
Of course, there? always a caveat.
Companies such as Kingston and Western Digital, titans in their own industries, have a lot more research and development dollars.
That means they could catch up to STEC? technology in the coming year.
Later down the line, a company such as EMC could look to diversify it? suppliers for solid state drives, potentially cutting into STEC? market share, industry watchers speculate.
Investors aren? worried. STEC? shares are up about 200% since the beginning of the year on a recent market value of about $675 million. The stock is up about 10% in past 12 months.
STEC is projected to do about $275 million in sales this year.
The company, which was started by the Moshayedi brothers in the 1990s to make memory modules for computers, later got into flash memory drives for corporate and industrial uses.
?e started working on enterprise solid state drives when the price of flash chips had come down enough where the costs would be equal or better to replace hard drives,?Moshayedi said.
In early 2007, STEC sent out samples to its target customers.
Hopkinton, Mass.-based EMC was ?he first to embrace it,?Moshayedi said.
It was a watershed moment for STEC.
EMC qualified it in early 2008 and a design win came shortly after that.
The move by EMC toward solid stated drives sent other server manufacturers ?ooking in to it in earnest,?Moshayedi said.
Since then, sales have been picking up speed.
In 2007, STEC saw roughly $12 million in revenue from solid state drives.
In 2008, it reported $53 million in sales of the drives.
STEC said it expects solid state drive sales to account for roughly $65 million in revenue for the first half of this year.
?t? a great feeling,?Moshayedi said. ?his is something that we thought would be significant in many markets.?enews_Column=0
