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Tech Report has been tracking prices for solid-state drives (SSDs) sold by OCZ, Intel (INTC),...

Tech Report has been tracking prices for solid-state drives (SSDs) sold by OCZ, Intel (INTC), and others since their 2011 releases, and estimates the average drive has seen its price decline 46% since launch time, thanks in large part to plummeting NAND flash memory prices. That has fueled growing SSD use within PCs (I, II), and is one of the reasons (among others) why hard drive giants Seagate (STX) and Western Digital (WDC) have seen their valuations reach dirt-cheap levels.
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Comments (14)
  • Stan Piland
    , contributor
    Comments (163) | Send Message
     
    This doesn't sound like new news. Declining NAND and SSD prices have punished share prices for hard drive makers (STX, WDC), SSD makers (OCX, STEC, FIO, and LSI) and flash producers (SNDK, MU) all spring. But SSD growth started to go parabolic last year, and that growth is still accelerating. Revenue estimates for OCZ are probably at least 20-25% too low for this calendar year, and the stock is trading at about 5X my C2013 earnings estimate. If they were smart, STX would buy OCZ to boost their SSD exposure. But the stock is so cheap and business is so good, I don't think CEO Petersen would sell. At these levels, neither will I. Disclosure: I own OCZ and STX, and I just started buying MU.
    23 Jun 2012, 07:03 PM Reply Like
  • ObsidianLightyearCapital
    , contributor
    Comments (35) | Send Message
     
    INTC is the only stock mentioned in this article worth investing money in.

     

    I don't understand why you own STX Stan. You know of the headwinds. At Obsidian Lightyear we don't believe the margin of safety is large enough to warrant an entry. Care to share your thesis? (because we don't see it but would love to be shown the light if there is any)

     

    Did you think of how the move into cloud computing might impact Seagate's earnings? I know Einhorn is in it but he's not ALWAYS right. Just a thought.
    23 Jun 2012, 07:21 PM Reply Like
  • Micah
    , contributor
    Comments (478) | Send Message
     
    Here is an investment thesis on the HDD stocks from Eric Savitz from Forbes (May 2012). He explains it best - http://onforb.es/HZ0Frw
    24 Jun 2012, 08:02 AM Reply Like
  • Stan Piland
    , contributor
    Comments (163) | Send Message
     
    Would recommend you check out the Savitz interview with Luczo provided by Micah on STX. I view STX much as I would VZ or T before their recent rise. The stock is incredibly cheap (2.5X F2013 consensus estimates), generates boatloads of cash, yields over 4%, and buys back a ton of stock. The demise of consumer HDDs will happen slowly and is more than adequately discounted in the price. And there will continue to be a significant role for enterprise HDDs within a tiered architecture storage environment for the foreseeable future. But most important, the industry has consolidated down to two players who control over 80% of the market. Without a price-spoiler to crush pricing in a downturn, cash flows should be MUCH more stable in the future...which in turn should justify a higher valuation. So I trade around a core position...sold a good bit over $30 and bought it back a couple weeks ago.

     

    I also expect STX and WDC to be more aggressive in the SSD business longer term. But there have been so many new players in SSDs recently, that has made sense to wait for a shakeout before spending a lot of money on acquisitions. That window may be closing soon, as clear IP leaders have started to emerge. I actually think an STX/OCZ combination would make a lot of sense for STX. But I think OCZ shareholders can make more over time if OCZ stays independent.
    24 Jun 2012, 11:48 AM Reply Like
  • Chris Lau
    , contributor
    Comments (1929) | Send Message
     
    (INTC) is the only buy: their CPUs are used in both mac and pc.

     

    (STX) (WDC) are dangerous to own. They held a premium because thailand's flood gave them huge margins. That advantage is now gone and now there is once again XS supply in storage. Worse, OCZ/SSD is growing. OCZ and SNDK are ones to watch, but the MU drop and the overall price drop in the last month ALONE is frightening. The sector anticipates further weakness.
    23 Jun 2012, 09:28 PM Reply Like
  • Jason F
    , contributor
    Comments (217) | Send Message
     
    I bought a position in fio two days ago. I hope that works well. I have some analysis here on FIO if anyone interested http://bit.ly/MiHH2i (my analysis was right...i called the bottom) and is now moving upward.

     

    I expect an earning runup and tons of short covering.

     

    FIO margin should benefit from this
    follow me on twitter 64turok if youd like to follow my fio trade. i dont plan to hold on earnings day
    23 Jun 2012, 10:02 PM Reply Like
  • Ashraf Eassa
    , contributor
    Comments (9081) | Send Message
     
    I am going to add significantly to my OCZ position ahead of earnings.
    23 Jun 2012, 10:46 PM Reply Like
  • kirk otis
    , contributor
    Comments (290) | Send Message
     
    Is there any solid analysis of the cost to manufacture HDD vs SSD? When I look at a HDD I see lots of mechanical parts that must be made with precision. There is a limit to how low the cost can go. Then will I look at SSD I see a clean, efficient IC which is limited to the cost of operating a fab. One has high manufacturing cost, one has high capital costs, but my expectation is that SSD has a lower cost to manufacture or soon will. I'd be interested if someone could provide some insight on the economics... some real numbers.

     

    Cloud storage, and cloud backup is becoming a reality. Such that the need for multiple drives or any drives in a household will diminish in just a few years. In my household of 4 we have 3 desktops, 3 notebooks, 1 backup drive, 2 DVRs, 3 USB drives. I envision each of those devices (except perhaps the DVRs) in 5 years all having SSDs and no HDDs, and that there will be a single 3 to 5T drive that is network attached for archival and backup. Each of the devices will have 250 to 500G SSD. There is no need for more because the actual drive space will be virtualized and will appear to be unlimited, and in fact it will be unlimited (limited only by amount I purchase, not the size of a piece of hardware). Additionally, my ISP will provide, due to the data being in the cloud, accessibity from anywhere, anytime via WiFi or LTE. At the same time, the function of the smart phone, Pad, and notebook will blend as they already are. No longer will anyone say, "oh, I have that number on my phone".

     

    A single 3T drive will cost (~$150) much less than the 9 drives (~$900) I currently maintain. And with dedup and compression what we currently see as 3T of storage will consume 30% of the space, resulting in much greater capacities than we currently have, and providing better access speeds because the amount of data that is transported across the network will be much less.

     

    Given the fact that ATT, Verizon, TWC, or Comcast are the primary ISPs across the US, and that most modern homes have a set top box that is connected to the WAN, and the set top box is off most of the time in a 24 hours period, it should be obvious that in a world where the set top boxes manufactures are struggling to provide something of value, and the telco's are seeking to grow their revenues and tie consumers in, it is not hard to see an offer that adds some functionality to the set top box to become a smart NAS that also backs-up to the cloud intelligently. (dedupe, compression, bandwidth aware, prioritizing data).

     

    Then there are additional headaches that go away.... already, when I buy a new device it is easy load it with my applications and data. With the virtualized storage, it will be even easier, and the environments will be consistent.

     

    What I find interesting is that CSCO and GOOG are in a great position to push this vision, and both are looking at what they should do with their Set-Top businesses. I've long thought that APPL should acquire the business and remake it in their likeness, but another logical path would be for a HDD to move to that space in an effort to vertically integrate and to create real value for the ISPs.
    24 Jun 2012, 09:29 AM Reply Like
  • Micah
    , contributor
    Comments (478) | Send Message
     
    I hate to turn this into a linkfest, but the full Savitz interview with Luczo can be found here - http://onforb.es/Ib7cg3

     

    SSDs require investment and scale which is unattainable at present. In addition, cloud storage will create a shortage of storage in the near future.

     

    Both pieces I have linked to in this chain are great pieces and a must read for anyone interested in storage
    24 Jun 2012, 10:09 AM Reply Like
  • kirk otis
    , contributor
    Comments (290) | Send Message
     
    The Savitz article doesn't provide any analysis of the cost which is why I asked. No need to provide links already posted. Some good info is available here: http://storagesearch.com, and Woody is very helpful.

     

    wrt SSDs, are you referring to the scale of the manufacturing capability or the devices? You are wrong on both counts as supply currently outstrips demand; and they can scale, but it is dependent on the file system and its ability to virtualize. Storage virtualization is pretty robust in the Enterprise space, but the larger value is in the consumer space because it is a space where people do not back up, have multiple devices per household, lack the capability to recover because they are non-technical, and are embracing smart devices (smart phones and Pad computing) faster than the Enterprise.

     

    What will happen is that the technology developed for the Enterprise will be put on ASICs, placed on the controller, and will be deployed in the consumer space at the set top box.
    24 Jun 2012, 11:34 AM Reply Like
  • Micah
    , contributor
    Comments (478) | Send Message
     
    The two links I provided are different. The second link above (actual Q&A) does get into costs of HDD vs. SSD. This is a 9 page interview which re-buffs all your points. I don't need to regurgitate what the most knowledgeable guy in the industry has to say. Just read the interview and your stance will change...trust me.
    24 Jun 2012, 11:59 AM Reply Like
  • GaltMachine
    , contributor
    Comments (1144) | Send Message
     
    I think the other casualties of this innovation are going to be the RAID based storage companies like NTAP & EMC and could be a reason why they have sold off so much (as well as being very volatile).

     

    As a former buyer of NTAPs in the dotcom era, I would have to say that although I loved the product and I think it is phenomenal, when it comes down to it SSD is the future (speed, reliability) and unless they figure this out they will go the way of other tech dinosaurs. As products go through their replacement cycles and buyers are faced with a new decision they don't always go with what they did in the past so it is this new purchase activity from once loyal buyers which is the activity that threatens to erode the long-term position of these icons of tech.

     

    It happened to RIMM.
    24 Jun 2012, 12:29 PM Reply Like
  • Paul Leibowitz
    , contributor
    Comments (1437) | Send Message
     
    Everyone, You all make great points but I seriously question the widespread use of the cloud for the following reasons: (1) it's not guaranteed to be available at all times (e.g., outages, maintenance, the usual reasons) or everywhere one is (people do leave their homes); (2) security (e.g., theft of confidential information, etc.); (3) I think physical backups will always be used as just another form of backup, this way local; (4) local storage is becoming very cheap and, unless computer makers start to build computers without storage, local HDD or SSD storage will always compete with the cloud; (4) the cloud is a pain because it is too slow, even with today's hi-speeds; (5) the cloud is probably unnecessary to all but those in love with technology. That said, some may buy rather than rent a movie on Amazon to watch at home and leave it on their site to avoid the download, but I can't understand leaving it on their site if the purchase of a movie is meant to be viewed on a plane trip, and you gotta' put it somewhere. Much of what I wrote applies to businesses, not just consumers.

     

    Today, I think SSD is the future. Don't know about tomorrow.
    25 Jun 2012, 11:48 AM Reply Like
  • kirk otis
    , contributor
    Comments (290) | Send Message
     
    1- it doesn't have to be available 100% of the time. Think of the Dropbox model where files are cached locally for performance and when you are disconnected. If 99.9% of what you require is local, and you are connected and the cloud is available 99% of the time you need the data, then everything will work well 99.99% of the time. With predictive modeling, the system will change what is cached in order to provide a better hit rate.
    2- data in the cloud will be encrypted. It is safer there than on a phone protected by a 4 digit pin, or on a notebook computer that can be cracked.
    3- local backups are frequently out of date, and only available locally, and can take hours if not days in practice to allow a restoration.
    4- agreed storage is cheap, and it will be cheaper in the cloud due to dedupe. But the storage media in a multi-tier environment can result in $500 in savings for a home environment.
    5- have you used cloud storage? terribly slow for rebuild if entirely from the cloud, but otherwise you rarely experience any delay due to tiering. Due to virtuallization you can be up and running in minutes.
    6- I would agree it is not 'necessary', unless you want a reliable, safe, offsite and significantly cheaper alternative to a local backup with the added benefit of access to the data from anywhere
    27 Jun 2012, 09:33 AM Reply Like
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