Thursday, October 13, 2005

Flash Memory Firms, Disk Drive Industry In Escalating Rivalry

As the drive to put more storage capacity on cell phones, mobile devices and consumer electronics continues, Investor's Business Daily writes about the battle for mind and market share between the flash memory and disk drive manufacturers. Both have their benefits. Flash offers durability and design flexibility while disks offer higher capacities and cheaper costs per bit. The article states the case for both technologies, but makes it seem that disk drives are winning out.

The article cites IDC research that forecasts "disk drives for consumer electronics will account for 40% of industry sales by 2008 vs. 20% this year."

Regarding Samsung's drive to develop ever-higher Flash memory capacities, Gartner analyst John Monroe said, "Samsung makes it sound like flash will kill disk drives. I seriously doubt Samsung will have the technology they are forecasting in cost-effective volumes in the time period they are indicating."

"Flash also is the clear incumbent in phones and cameras and a host of other devices, but disk drives are beginning to be integrated into them as well," added Monroe.

One thing the article doesn't clearly point out is the BOM costs for using disk drives. Since hard-disk drives have a capacity-independent fixed cost derived from platters, heads, motors, chassis, and the like, the hit to the BOM is usually in the $90-100 range. As technology improves, you just get more capacity for that same price. Take for example the new iPods. Before $299 would get you a 20Gb iPod, while as of today you can now get a 30Gb version for the same price.

So who will win, Flash or disk drives? It all depends on the target market. If it's capacity driven then disk drives win hands down. But for the sub $99 mass market, solid state memory is where it's at....