SSDs start to make inroads in corporate India

Solid-State Disks are still expensive vis-a-vis conventional hard drives but a combination of hard disk prices rising on account of the Thai floods last year and SSD capacities finally reaching reasonable levels combined with vastly superior performance is leading to their seeing some degree of adoption in laptops where performance is vital. By Durba Ghosh

Solid-State Disks (SSD) have been around for a while now but the technology has started to gain ground only of late. Several factors including a severe shortage in Hard Disk Drive supply and subsequent rise in prices on account of the Thai floods last year, coupled with a drop in SSD pricing and improvements in the capacity and reliability of this technology have helped it make inroads in the Indian enterprise.

First off, let’s clearly demarcate the SSDs that are being talked about in this article. The SSDs that are used in enterprise storage are based on a different technology (SLC) than those in laptops (MFD). It is the latter that we are talking about.

“SSDs are the next big thing in the market. The device is faster, crash proof and the data saved is secure. It can reduce power consumption, which translates into cost savings. However, pricing has been the biggest reason for its delayed adoption,” said Nidhi Sethi, India Sales Director for Flash, Kingston Technology.

SSDs use microchips that retain data in non-volatile memory chips and contain no moving parts. They are distinguishable from electromechanical Hard Disk drives (HDD) with spinning disks and movable read/write heads. SSDs are typically less susceptible to physical shock, are silent and have lower access time and latency. The technology uses the same interface as hard disk drives—it’s basically a drop-in replacement.

Since most SSDs use NAND-based flash memory, which retains data without power, power consumption goes down. The biggest bang for the buck, despite the significantly higher per GB pricing, comes from vastly improved performance. A laptop with an SSD boots up in 15 seconds instead of a minute or longer with a HDD; applications load in the blink of an eye and so on. “SSDs make a lot of sense for SMBs as well. Although the initial investment is higher in the case of SSDs than it is in the case of HDDs, these drives offer superior performance,” said Sethi.

One reason given as to why SSDs are picking up is that there is a question mark about a HDD’s ability to deliver the requisite levels of application performance in the future.

Narrowing pricing gap
SSDs have been unable to uproot HDDs largely due to the considerable price difference between the two technologies. In India, a vanilla 240 GB SSD costs Rs. 13,000 while a high-performance drive can cost Rs. 16,000-20,000 on the street. A 500 GB laptop HDD costs Rs 4,500-5,000. On the face of it, that looks like an unsurmountable hurdle. However, for those who consider performance to be vital, an SSD still makes sense. Moreover, in the corporate world, drive sizes are typically smaller. A 120 GB SSD is available for Rs. 7,500-11,000. IDC expects the overall price per gigabyte to fall below $1 in the second half of 2012 for SSDs.

“SSD progress in India till now has been slow because of the higher per-GB cost as compared to hard disks. Now that a 120 GB MLC drive has gone down below the $100 price point, sales are expected to pick up in the coming 12-24 months,” said Sumit Khemani, Product Manager – NAND Flash, Strontium Technology.

The shortage in HDD supply and subsequent increase in prices coupled with the rising popularity of tablets and smartphones and a decline in SSD prices has given the perfect platform for the technology to bloom.

The industry has seen a steep rise of about 30% in HDD prices following the devastating Thailand floods in 2011 that adversely affected the production of HDDs. Thailand, the second largest exporter of HDDs, suffered severe damage to industrial operations and witnessed the closure of over a dozen HDD factories due to flooding. This led the manufacturers to increase prices, a trend which is expected to continue through 2012, as per IDC.

“Flooding in Thailand had inundated HDD assembly and the HDD component factories located there, which accounted for 40-45% of Worldwide HDD production. Even when supplies stabilized, the prices were not restored to previous levels. We assume that the players chose to protect the higher margins created due to the random event,” commented Adwaita Govind Menon, Associate Director & Head – New Products, IDC India.

Growth trajectory
However, a decline in prices of SSDs and a rise in HDD prices due to a tight supply situation after the Thailand floods, has not been able to kill the price advantage, which is still with the HDDs. Nevertheless, if performance and fast boot-up are the priority, SSDs are the technology to employ. Vendors reckon that the next two years will see almost 50% of the HDDs in the market being replaced by SSDs if the prices remain stable or maintain their downward trend.

Globally, SSD shipments are expected to grow at a CAGR of 51.5% from 2010 to 2015. In 2011, worldwide SSD revenue reached $5 billion. The global market for HDDs is expected to grow at a CAGR of 8.1% from 2011 to 2015 to reach $32.1 billion. According to IDC, the enterprise segment is where the core of SSD adoption is occurring because of price drops and improved technology.

Currently, SSDs accounts for just 1% of the 4.6 million portable PC units shipped in 2011.

“The Indian market for SSDs has grown during the last two quarters. Prices are coming down every month, while HDD prices are going up. The cost difference between HDDs and SSDs will narrow further. The bulk of demand that we see for SSDs is in the enterprise segment. We will focus on replacing the HDDs in the market,” said Ankur Sarkar Sales Manager – South Asia, OCZ Technology.

Prices of SSDs have fallen by over 50% in the last six months riding on higher demand and a decrease in prices for NAND flash memory chips, which are used in SSDs to store data.

Flash prices went down significantly in 2011. To put things in perspective, a 120 GB SATA 2 SSD in January 2011 was priced above $200 whereas today a 120 GB SATA 3 drive costs less than $100. The prices are expected to go down by another 30%-40% by year-end.

Fast and secure performance
Enterprises are expected to be the early adopters of SSDs. The top players in the SSD market including Kingston Technology, SanDisk Corporation, OCZ Technology and Corsair Memory already have clients in sectors such as airlines, media, security services and ticketing. These market leaders expect demand in the enterprise segment to grow faster than demand from end-consumers.

“About two years back, the acceptability of SSDs was close to zero. In the past two quarters or so, demand has increased, primarily in the enterprise. In the consumer segment too, products are being launched with SSDs. However, it is still a niche segment. We already have a presence in the enterprise and are looking for additional opportunities,” said MA Mannan, Country Manager – India, Corsair Memory.

IDC expects SSD revenue to more than double year-over-year because of strong shipment growth in the enterprise and client segments.

Many enterprises currently use SSDs as a supplement to hard disk drives. However, SSD vendors felt that it was a stepping stone for SSD technology and they argued that HDDs would eventually be replaced by SSDs as prices came down.

Educating the market
These players have also taken initiatives to educate companies as well as end consumers about the benefits of SSD technology. Kingston has taken up several educational programs and seminars to promote the technology. It also intends to organize road shows in order to spread awareness.

“The industry needs to be educated about the technology, that is the biggest challenge. There has been an uptick in demand for SSDs, but more needs to be done to spread awareness,” said Manisha Sood, Country Manager – India and SAARC, SanDisk Corporation.

Nidhi Sethi of Kingston Technology agreed that, although there has been a growth in demand, the market had to be made aware of the advantages of SSDs.

Ripple effect
SSDs have had a slow start in a price-sensitive market. Nevertheless, several factors have pushed the technology to the forefront. Multinational companies and large cap enterprises have been the first to adopt the technology, primarily due to technology awareness and their purchasing power. Now when SSD prices are declining, SMBs are also adopting this technology. This is expected to start a ripple effect. Though it took a natural disaster to make even a small dent in the HDD monopoly, SSDs have scored on performance from the start. Then there’s the huge push that Intel and AMD are making along with all the leading PC vendors around ultralight laptops. These typically sport SSDs and, if they take off with lower prices expected in H2, things could look a lot brighter for this category.