When Apple CEO Steve Jobs this week introduced a slimmer version of the MacBook Air, an ultra-portable laptop without a traditional hard disk drive, he said it represents "the future of notebooks." Several industry observers agree.
Beginning with MP3 players, NAND flash technology in the form of solid state drives (SSD) has been devouring the consumer hard drive market from the bottom up as prices go down.
And, while hard disk drives will still populate servers and storage systems in corporate data centers for years to come, there will be fewer of them as solid state drives cannibalize the top tiers of data storage there.
Meanwhile, analysts say that NAND flash will eventually be embedded on the motherboards of consumer electronic products, reducing the bottleneck between the computer's processor and its mass storage device.
For Apple, the new MacBook Air represents a new price point for systems with SSDs, which will mean some cannibalization of its existing MacBook laptops sales.
The MacBook Air tapers from just over half an inch to a tenth of an inch in thickness (.68-in to .11 inches), and it weighs just 2.9 lbs. At the heart of its slimness, lightweight, low power consumption and durability is a solid state drive, which ranges in capacity from 64GB to 256GB depending on the model. By comparison, Apple's MacBook, which has a 250GB tradional hard drive, weights 4.7-pounds.
After Apple cut the Air's price this week, it matches the MacBook's $999 price tag.
"Flash had to get to the point where it is cost effective,"said Jim McGregor, chief technology strategist at market research firm In-Stat. "Now we're down to that point."
While solid state drives are still an order of magnitude more expensive than consumer hard disk drives, lower-capacity 64GB SSDs can be had for an affordable $100 or so, and 64GB is plenty of capacity for most users, according to McGregor.
While hard disk drives have increased in density and capacity with staggering speed over the past few years due to emerging technologies like perpendicular recording and larger drive sectors, consumers have started sharing more and more data through the Internet and storing it in the cloud rather than on mobile devices. Thus most users don't need any type of multi-terabyte drive on a laptops.
"Even though we hear content is expanding exponentially ... a lot of it's not stored on the hard drive," said McGregor. "You can get to a point where SSDs just make sense, especially on mobile PCs."
McGregor added, "Even digital home products like Apple's new Apple TV switched from having a hard drive to just using a streaming model. All the other home devices we're seeing coming out are going the same way. You don't have to store that information, you just have to be able to access it and buffer it. That's a significant change over the past few years in the use of the cloud."
NAND flash prices set to plummet
And the cost of NAND flash memory is expected to fall even further very soon.
Typically, NAND flash prices undergo a dramatic collapse at the onset of an oversupply, according to Jim Handy, an analyst at Objective-Analysis. Such oversupplies almost always stem from the capital spending by manufacturers to ramp up production.
Earlier this year, Toshiba Corp. announced that it had started construction on a new NAND flash chip fabrication facility at its Yokkaichi City, Japan, operation. The facility, a joint venture with longtime business partner SanDisk Corp., will turn out about 210,000 NAND wafers a month when it becomes fully operational.
On average, the price of NAND flash memory drops 40% per year. Today, SSDs cost about $1.20 per gigabyte.
Because of capital spending by manufacturers, which began in the second half of 2009, Handy believes there will be a significant oversupply by the second half of 2011. "By this time next year, the price per gigabyte is likely to be closing in on 50 cents," he said.
However, Handy did note, "That's all well and good, but it's still an order of magnitude more than hard disk drive prices, which I would expect to be less than 5 cents per gigabyte by that time."
With such a continued price differential between hard disk and solid state disk, Handy believes that the vendors must move to help prompt a shift in consumer thinking toward storage.
Currently, the average consumer looks at three things when purchasing a computer: processor speed, memory size, and hard drive capacity, Handy said. Processor manufacturers, such as Intel and AMD, were successful in a campaign to get consumer's attention off of megahertz and onto the name of the processor and the number of cores it has.
SSD manufacturers like Samsung and SanDisk have tried to do the same thing with their products -- getting consumers to think more about performance, durability, and power consumption than sheer capacity.
"They failed, but they don't have the clout Steve Jobs has. Stave Jobs can tell the market where to go and it just might go that way," he said.
Driving the data center
The data center market for SSDs is still at only $300 million, far lower than the $20 billion in hard drive sales to IT operations, said Rajesh Ghai, a director and senior research analyst at ThinkEquity LLC.
However, the data center SSD market is expected to double in the next year, he added.
More enterprises are moving toward a tiered storage architecture, with SSD at the top tier, followed by serial-attached SCSI drives and serial-ATA drives. As the price of SSDs continues to drop, more will be added to the top tier to take the place of higher-end hard drives, Ghai predicts.
"We will eventually see just a bunch of SSDs and then SATA drives below that over the next two to five years," he said. "Seagate, Western Digital, Hitachi, Samsung and Toshiba. They will all see some of their hard drive market being cannibalized by SSDs."
Handy agreed and predicts that SSDs will kill off much of high-end enterprise hard disk drive market that Seagate dominates today. The impact is already being felt by the storage vendor, which reported this month that first quarter profits fell by 17% drop on flat sales. At the time, officials wouldn't clarify statements the company has made about trying to go private.
About a week ago, Seagate announced that it has received a preliminary indication of interest from investors regarding going private. According to a report in the Wall Street Journal, private-equity firms TPG Capital and Kohlberg, Kravis Roberts & Co. are in talks to take Seagate private in a deal that could be worth up to $12 billion.
The move toward going private is an attempt to manufacture cash flow by selling itself, restructuring, and then going public again when its debt is paid off, Ghai said.
Seagate used the same strategy ten years ago, when if went private with a $1.5 billion buyout by a group of investors. After drastically cutting its staff, Seagate went public again in 2002.
But the most immediate trouble facing Seagate and its rival drive makers rests in the consumer market, where tablet PCs with SSDs, such as the Samsung Galaxy and the Apple iPad, have eroded the hard drive market, reducing demand and creating a surplus of hard disk drives.
"In the long-term, there will be a considerable impact on hard drive manufactures from SSDs in the enterprise storage market. In the near term, the impact is coming from the move to tablets from the PC form factor for consumers," Ghai said.
Lucas Mearian covers storage, disaster recovery and business continuity, financial services infrastructure and health care IT for Computerworld. Follow Lucas on Twitter at @lucasmearian, or subscribe to Lucas's RSS feed . His e-mail address is firstname.lastname@example.org.