Back in December, I wrote about Texas Memory putting itself up for sale.
Recently, IBM purchased Texas Memory. This is not the end of the consolidation of SSD vendors. Now a rumor of Seagate buying OCZ is circulating. This will not end the buyouts of the SSD vendors, either.
There are too many vendors, and the cost of sales and marketing for SSDs is high, which will lead to consolidation in the market. SSDs have become a commodity. Whether they are for the enterprise or for my laptop, and whether you make a PCIe card, SAS interface or SATA interface, the engineering costs for developing the interfaces are likely about the same for all vendors. Yet the cost of marketing and sales is high, especially for the enterprise side of the house. If you are a vendor and want to sell to one of the big storage appliance vendors (e.g., EMC, NetApp, HDS or HP), you must get in the door (sales and marketing), and then go through the qualification process. This takes time and money. The disk drive vendors know the drill, as they have to do it for each rev level of their drives and their firmware, which is often specific to a storage appliance vendor with specific tunables and settings so that drives cannot be obtained via third parties.
I believe the market will continue to consolidate, and large companies will purchase the smaller companies based market where the bigger company wants to focus on. For example, if the Seagate rumor is true, it is clear that Seagate wants OCZ to better focus on the low end of the market, just like SanDisk buying Pliant allowed SanDisk to focus on the enterprise. Another sign of consolidation in my opinion is that the number of new vendors entering the market has slowed dramatically.
Long term, I believe that SSDs are just another commodity in the storage hierarchy, and we can use the same vendor model we saw in the 1980s with disk drive vendors. Once there were a dozen or so vendors; now there are three.
Labels: IBM, SSD, Seagate, consolidation, Texas Memory Systems, OCZ
posted by: Henry Newman