In response to an article titled, “2011-2016 CAGR of 8.6% in Revenues for HDD Industry” on StorageNewsletter.com, we asked SMART Storage Systems President and storage veteran, John Scaramuzzo, for his take. Mr. Scaramuzzo has over 25 years of experience in storage design and leadership in both the HDD and SSD markets, making him an ideal candidate to speak to the article.
John, what effect do you think last year’s natural disasters in Southeast Asia, where a majority of HDDs are manufactured, have had on the HDD and SDD industries?
The floods in Thailand impacted both industries tremendously! Obviously, the prices of HDDs shot through the roof due to the shortage created by manufacturing facilities being unable to produce any significant quantities for months. I think the price hike made people take a step back, and reconsider their storage purchases. When you are comparing an HDD that is no longer just pennies per GB, to a high-performing SSD, the cost-to-performance balance becomes even more noticeable. As a result, SSD shipments have risen significantly in 2012, and when coupled with the technologies that help make SSDs more and more affordable by enabling the use of cheaper Flash, those floods may have set the stage for the HDD downfall- contrary to what the article may say.
Why do you think they speculate that instead of the floods priming the market for SSDs, that HDDs will now “recover some of the excessive price erosion that began in 2009?”
I actually don’t believe that statement is based on speculation. Instead, I believe it is simple economics. Before the floods, there were an excess of HDDs which caused the prices to drop lower and lower, eroding away margin. . After the floods however there was a shortage in HDDs, causing the prices to shoot up and giving some margin back. As HDD manufacturers finish their recovery and get back to full capacity production, they will be able to set their output to meet demand while maintaining healthier margins. Even in this scenario, HDD will be lower cost than SSDs. However, the pricing gap between the two drives is closing. SSDs prices are falling, and when enterprise organizations factor in the performance gains and additional cost reductions in cooling that SSDs provide, this will cause the scale to tip into the favor of SSDs quickly.
The article states that industry revenue could approach $50 billion by 2016 with the widespread adoption of hybrid SSHDs. Why wouldn’t SSDs just replace HDDs and SSHDs in the first place?
I think we can gain a lot of insight by looking to the past – specifically the evolution to HDDs? There were magnetic drums, magnetic disks, the IBM 305 RAMAC, etc. The point is there will always be a newer and better technology, but the market typically goes through an evolution process before jumping on board. When a new technology is developed, especially in the storage industry, it takes a while for the price to adjust to market expectations. So in the time period of price deflation, there is a transition period. People may want the speed and performance of an SSD at the cost of an HDD which is why they opt for the hybrid, which gives better performance and high capacity, getting the solution to a price-per-GB they are used to seeing. As SSD technology progresses and prices drop, which we are already seeing, the transition will move from HDDs, to SSHDs, to SSDs.
The article also states that enterprise storage will grow to be the major consumer of HDDs. What do you think of that statement?
Looks like they need to take a trip to SMART Storage Systems, eh? It is no secret that SSDs are already beginning to take over the consumer market, however I don’t think many really understand the change taking place in the enterprise. As data sets become larger, and people expect more real-time access to these large data sets, SSDs are being identified as the solution to the storage bottlenecks that many organizations face today. I believe that in two- or three-year’s time, SSDs will become the new norm in enterprise server and storage environments, and HDDs will reside where slower, higher density storage is acceptable.