Why enterprise SSDs are a key driver for SanDisk’s future growth

Market Realist

An in-depth review of SanDisk's 2Q14 earnings and plans (Part 2 of 12)

(Continued from Part 1)

SanDisk’s solid-state drives

According to market research firm IHS iSuppli, demand for SSDs is expected to grow more than 40% each in 2014 and 2015. These are the factors that are driving demand and their suitability for mobile computing devices.

According to market research firm IHS iSuppli, demand for SSDs is expected to grow more than 40% each in 2014 and 2015.

According to EE Times, Intel (INTC) leads the enterprise SSD space with a 21% share, followed closely by Samsung (SSNLF), which held a 20% share. Western Digital (WDC) and SanDisk (SNDK) command 14% and 13% shares, respectively. Micron Technologies (MU) commands 8% of the market. In 2013, Fusion-io commanded a 12% share in the enterprise space. But, as Fusion-io has been acquired by SanDisk, it has been included in “Others.”

Factors contributing to the enterprise SSD market growth

Upgrades in technology have led to a fall in price per GB rates. This change has increased performance and lowered the total cost of ownership. This has led to the enterprise SSD market gaining traction in data centers and cloud storage. It’s expected to grow faster than other storage devices.

Expansion of SAS and SATA SSD portfolio

Through the acquisition of SMART Storage Systems in 2013, SanDisk expanded its SAS SSD portfolio and also started addressing the SATA SSD market. Serial advanced technology attachment or SATA and SAS are disk drive interfaces.

SATA SSDs, with command TRIM, are used by enterprise servers for their reasonable performance. SAS SSDs, with command UNMAP, offer reliability, data integrity, and data file recovery. These qualities make them suitable for enterprise applications.

SMART’s Storage Systems Guardian technology has led to an improvement in the performance and endurance of NAND flash solutions, adding to the strengths of the company. The company also launched a new solution, “ULLtraDIMM,” an ultra-low-latency SSD in the enterprise SSD category, in 2014.

Solid-state modules or SSMs—a solid-state storage initiative for enterprises—reside in a dual in-line memory module (or DIMM) and usually use SATA.

Also, the company’s latest acquisition of Fusion-io is expected to enhance its embedded SSD offerings.

Enterprise SSD is seeing strong competition and consolidation

Intel and Samsung have an influential presence in the enterprise SSD space. Samsung and Western Digital, through the acquisition of Virident (an enterprise SSD vendor), are making inroads fast in the enterprise SSD space.

Objective Analysis expects the enterprise SSD market to be worth $3.5 billion by 2016. Also, it’s expected to command a 33% market share by 2016, compared to 10% in 2012.

Enterprise SSD, owing to its strong growth prospects and stable pricing environment, should be the fastest-growing operating segment in 2014, according to management. New product launches and the development of technologies like next-generation 3D NAND technology show SanDisk’s efforts in making a place for itself in the enterprise SSD space.

Continue to Part 3

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