The Flash Memory Market: 'Hunger Games

by Rip Wilson

Mar 3

Flash memory is a hot topic lately. Already one of the biggest innovations in IT, flash has been gaining momentum, within the broader IT market as much as in the datacenter. There’s no arguing that flash has redefined what’s possible in data storage and IT. And as more and more companies validate the space, the demand for flash will surely grow, resulting in more innovation to meet customer needs.

So what exactly is flash?

Although it sounds technical, flash is really all about performance and efficiency. However, flash has been operating in the shadow of traditional hard disk technology for a while, primarily due to cost factors; despite its performance capabilities, flash was expensive and hard to justify. In recent years, however, the price of flash has come down to a point at which its performance benefits outweigh its costs.

Today, flash storage primarily is offered in the form of hybrid arrays, a practical best-of-both-worlds approach that uses a mix of flash and traditional hard disk drives. Hybrid arrays provide the right level of performance at the right cost for the majority of business applications.

Gaining momentum, however, are all-flash arrays, which deliver extreme responsiveness for performance-hungry applications. This technology is ideal for organizations in which information or data-access delays or consumption can constrain business dramatically, affecting competitive advantage. More than ever, companies see the benefit of faster access to data and look to the storage industry to give it to them.

But innovating in a space that now includes just about every large and small player in the sector raises the question of whether the flash market has narrowed down its primary players.

Hunger Games for All-Flash Start-Ups?

We have to wonder if the much-anticipated Hunger Games for all-flash start-ups have quickly morphed into “Clash of the Titans.” Have the games ended, primarily through a fast round of acquisitions, or is there still enough room for innovative and driven young companies to succeed?

That depends on how you define “succeed.”

But, first, a little perspective. Although it is certainly true that flash is growing faster than traditional storage that does not mean it is growing bigger.

Revenue in the overall storage space is measured in the billions, while in the all-flash space it is measured in the hundreds of millions. All-flash is growing quickly, but it is still a relatively small piece of the overall storage market. And until demand grows -- and grows substantially -- the battle is over relatively small turf.

That could change quite quickly, though, particularly as the major players enter the market on the heels of the all-flash start-ups. But is it an unbalanced match-up?

Certainly, the major players have many advantages, given their history in the market and their trusted reputations. They not only offer sustained growth and stability for the market itself, they also offer security, stability, and a greater level of reliability, availability, and service, which can only come from decades of experience. Although some companies are progressive and like to buy from new providers, the larger an organization is, the less risk averse it is. And with as little stability as scalability, some of the all-flash start-ups admittedly seem a little risky.

Although the dangers of data loss are probably overstated enough to be essentially just scare tactics, the risks of downtime are very real. When companies do not have the experience to understand why their systems freeze and the expertise to quickly remedy issues, customers can find themselves with service outages for hours or even days. As data becomes ever-more mission critical for organizations, regardless of their size, the risk of downtime alone is enough to dissuade some from working with newer vendors.

The primary competitive advantage that most start-ups have had -- and many have played it to the hilt -- is price. Unfortunately for them, it is a hand that will become less strong as the market takes shape -- and not just because the reliability and service of bigger companies are considered a premium.

Although many of the start-ups were indeed willing to sell products very cheaply, it was because they wanted to get units in the field and establish a footprint, with the end goal of being bought by a larger company. They were not concerned with the long-term financial viability of their companies -- and, by extension, the customers who actually purchased their product -- because the end game was always a buy-out. That was how they defined success.

The larger companies, which have had to contend with the artificial deflation of this price war over the past couple of years, are finding that this circumstance is becoming less of a factor. All the major players have made their decisions, placed their bets, and acquired the companies and technologies they believed were best. Or, as is the case here at NetApp, they decided a homegrown approach was the best way to meet customer needs.

For many, this is how the all-flash Hunger Games are quickly playing out -- and the companies that aimed to be purchased but weren’t face a new battle: staying relevant. But this is where the story gets interesting and good -- particularly for the market. History tells us that there is certainly a space for and a role to be played by innovative and hungry smaller businesses.

As awareness and interest in flash grow and companies battle for market share and mind share, the biggest threat for customers is the FUD and feature-hyping that are creeping into much of the flash conversation and marketing. Customers need companies that will act as strategic technology partners.

Flash is not magic. One size does not fit all. It does not fix poorly configured systems and it is not appropriate for all environments. And some environments simply don’t have the compute power to see gains from flash. In the battle for market share, many new players primarily emphasize speed when, really, the conversation needs to focus on the needs of the customer. Flash conversations with a customer must begin and end with what is actually appropriate for the customer’s business. This is where companies that have a portfolio of offerings will often be able to provide a better solution.

Business success today requires balancing cost, opportunity, and risk amid rapid change and explosive data growth. Transformative technologies such as the cloud and flash can help organizations become more responsive; the question is, what is truly transformative technology?

If smaller players compete in a way that stays focused on customer needs and larger companies continue to have an impact on technology, we will likely see an explosion of innovation in that area. And that innovation will drive greater adoption, which in turn will drive more competition. When that happens, it will be a fight that may get heated quickly -- and no matter who the main players are, the winner will clearly be customers.

Rip Wilson is Senior Product Marketing Manager for All-Flash Arrays at NetApp