I tried to think back in the recent past to see when the storage industry made an immediate shift to a new interface or form factor, along with the reasons behind it. I was able to come up with one, very definite example – Parallel ATA (PATA) to Serial ATA (SATA) in the 2001-2002 timeframe. At the time, PATA throughput at the interface was 100MB/sec. It seemed like overnight all HDD manufacturers switched over to SATA as the interface throughput was able to jump to 150MB/sec, more than accommodating the media data rate of almost 100MB/sec at the time. In summary, it was needed! Oh, and the last important point was that HDD vendors didn’t charge a higher price for the SATA solutions.
Now, let’s review some other anticipated transitions where many people thought the entire industry was going to switch – en mass and overnight – to a new and improved technology.
Desktop PCs to Notebook PCs:
In 2001 and 2002, most people had the feeling that 3.5” HDD based desktop PCs were going to give was to 2.5” HDD based notebook PCs. We quickly learned that, in fact, this was not meant to be. In 2014, the industry shipped approximately 135M desktop PCs with 3.5” HDDs in them. One key metric that has kept 3.5” desktop HDDs around: it is still cheaper than an equivalent capacity 2.5” HDD.
Notebooks to Tablets:
Remember when Apple introduced the iPad? Soon enough, many companies were producing their own version of a tablet. Soon after, many predicted tablets taking over the notebook PC market. Now we have quite a few years experience with both of these devices and it has become clear – notebooks remain as primary devices for content creation while most users of tablets consume content or perform light-duty computing tasks. Bottom line, the industry still shipped approximately 175M notebook systems in 2014.
Large Form Factor (LFF) Enterprise HDDs to Small Form Factor (SFF) HDDs:
In 2004 and 2005, much of the server and storage market was introduced to SFF SAS HDDs. The thought by many was that these smaller, lower powered, solutions would eclipse the larger 3.5” counterparts. In fact, it took approximatley quite a few years to see this transition happen. In actuality, in 2015, the industry is still shipping a few (very minimal) 3.5” 15K HDDs. The key driver that helped make the overall transition happen – price! It wasn’t until suppliers offered the SFF solutions at the same $/GB at the same capacity point versus the LFF solutions that the transition proceded in earnest.
SATA to SAS Migration in Nearline:
Nearline HDDs are the lowest $/GB solution of any storage device offered in the industry (both HDDs and SSDs). So when you use the same head and media technology, targeting the same use case in the market with a different interface protocal, it is no surprise that a $5 to $10 cost adder for SAS exists. The additional cost for some enhanced features has prevented the overall nearline market from making a complete transition to SAS from SATA. We estimate about 15% of the total nearline TAM was SAS based models in 2014. Based on the especially cost sensitive hyperscale market (a large consumer of nearline HDDs), we do not see SATA nearline HDDs going away anytime soon.
HDD to SSD Transition:
Focusing on the notebook segment (which has driven the largest unit growth of SSDs), when looking at SSD adoption, you need to distinguish between the consumer versus commercial market. The buying behavior and storage requirements differ for between each market. In the consumer segment, capacity and price point still dominate as the two factors dictating what storage device is desired (what the consumer is willing to buy). Most notebook PCs shipped today have 500GB HDD. When a consumer is ready to buy a new PC, they want to either to match or beat their current system’s storage capacity, along with maintaining a predetermined price point they are willing to pay. As the vast majority of notebook systems shipped today are at/around a $400 price pointan SSD would not meet an acceptable bill of materials budget for that given system, unless if capacities are kept very low (a 128 GB value SSD will only reach the price of a 500 GB HDD by the end of this year). Assuming the ratio is approximately 60% consumer and 40% commercial, that means that the approximately 100M consumer notebooks were shipped in 2014 with the vast majority HDD based. The commercial segment, however, can and will see faster migration to SSDs (at the expense of HDDs). In the commercial market many corporations may have policies where personal data is not allowed to be stored on notebook systems issued by the company. For this reason, along with shared networked storage, leads the commercial notebook market to integrate with lower capacity devices in notebook systems. As the 128GB and 256GB price points for SSDs continue to decline, these solutions become more affordable for notebook systems. As a result, SSDs will solidly encroach on the commercial notebook segment over the course of 4 to 5 years; however, the total notebook PC market, including consumer models, will maintain an HDD attach rate of over half the market, at least through 2018.
HDD to SSHD Transition:
As discussed above, adding any type of cost in a notebook system where the sweet spot price point is $400 or less, and, as a result, solid state hybrid drives (SSHD) will have a tough time seeing any substantial growth in this market. Adding 16GB or 32GB of NAND to an HDD with an average price point of $38 (500 GB), makes will increase HDD prices by 10% or more. This is pretty much a non-starter for SSHDs to take over the majority share vs. standard HDDs. SSHDs, will, however, continue to service a small niche in the notebook segment where performance and capacity are both important factors.
In summary, aside from the notebook to tablet example, you can see that the common denominator in most all examples has been price. Over the years, we continually hear about a new technology or device overtaking an old one in a short amount of time. When having these discussions, we need to consider other factors other than just “better specifications.” These other factors include: will it be the same price as the current solution? Is the current solution not good enough for the given application or use case? Will there be other suppliers in the market that have the strategy to keep the current technology or device shipping at any cost? Is there standardization for this new technology? Is there a dual supply situation for this new technology? In summary, when trying to figure out if and when a new technology or device will eclipse an older one, always consider the business case as well as the specifications of the device itself.
Well said Don…
What are your thoughts about 2.5inch in the DT PC as a use case?
For lower capacities (e.g. 500GB) isn’t the cost of a 1 disk 2.5in HDD nearly the same as a 1 disk 3.5inch HDD? Shouldn’t we start to see some transition here, especially as more DT and AIO vendors focus on form-factor improvements and more power-efficient DT systems designs?
Scott – currently it is about $1 delta between 3.5″ and 2.5″ at 500GB (3.5″ is cheaper). I guess that $1 delta makes a difference! Also, in PC’s, the majority of 3.5″ implementations spin at 7200rpm, whereas 2.5″ HDDs spin at 5400rpm. We do see some System OEMs designing thinner systems with 2.5″ as the preferred form factor, but this is still the minority by far.