Chris Mellor of The Register considers whether STEC’s lead in the high-performance SSD space is sustainable.

When competition does arrive in the enterprise SSD market, and as STEC starts competing in the more price-sensitive server flash market, then its early golden days – its first-mover advantages – will come to a close. Prices will drop and it will have to replace lost margins with higher volumes.

The company probably has until mid-2010 at the earliest before that happens.

The innovator’s dilemma
In the book by that title, Clayton Christensen reviews the disk industry’s form factor transitions – despite coining the term “disruptive technology” the only thing that changed was form factors – and found that with very few exceptions – Seagate & IBM – a 2 year lead in a new form factor was all it took to consign former players to oblivion.

How could a mere form factor change trigger mass corporate extinctions? Because in OEM storage a first mover may win the business, but it is relationships and service that keep the business.

It takes time and effort for qual engineers to develop confidence in vendor engineers. Once they do inertia rules. STEC has a big lead and as long their management team executes there is little competitors can do.

An example
Seagate’s first product, a 5 MB 5.25″ hard drive – I had one in a DEC Pro 350 – was pathetic: tiny, slow and noisy. Silly, compared to the fast 9″ drives that were taking the enterprise by storm.

But by the time 9″ vendors shipped 5.25″ drives, Seagate had shown the OEMs they were a quality supplier. So the OEMs only needed an alternate supplier. Dozens exited the disk business in a few years.

The StorageMojo take
There might be room for 3 enterprise SSD vendors, but 2 is more likely. The long-term threat to STEC is architectural: as often noted on StorageMojo, flash does best close to the CPU. Check out Fusion-io.

Of course the array and storage interconnect vendors should be working hard to reduce storage latencies, which works to STEC’s advantage, but this will take 5 years, not 2, to sort out. And the threat to Fusio-io is flash on the mobo, but since almost no one is working on it that is a distant threat indeed.

Long term the real fight is between NAS and DAS. How do the advantages of shared storage stack up against very fast local storage? There’s a place for both of course, but given bandwidth’s slower cost declines DAS – for the first time in years – may have a sustainable advantage.

Courteous comments welcome, of course. Disclosure: I’ve done work for Fusio-io and wish I owned stock. I haven’t done work for STEC, but do own their stock. Neo, what should bake your noodle is: do I own STEC stock because of my analysis; or is the analysis due to my owning their stock? Which came first?