Loser: Too Little, Too Soon

Most analysts are nonplussed. “Does Samsung really understand the demographics and the price threshold that people are willing to pay for these products?” asks Celeste Crystal, a senior research analyst with IDC’s Semiconductors Group, headquartered in Framingham, Mass.

While flash memory is ubiquitous these days in devices using 4 GB and less, there are several compelling reasons that you don’t find it in the hard-drive bays of PCs, notebooks, subnotebooks, or tablet computers. For example, flash-based solid-state disks (SSDs) have astronomically high prices and absurdly low capacities relative to conventional magnetic hard drives. SSDs cost 60 to 70 times as much as hard-disk drives, which boast capacities and read/write speeds that flash makers like Samsung aren’t going to approach for at least another three years, industry observers say.

Last May, Seoul, South Korea­based Samsung Electronics Co., the world’s No. 1 NAND flash vendor, announced NAND flash­based SSDs ranging in capacity from 4 to 32 GB aimed at notebook, subnotebook, and tablet computers. The flash-based drives that Samsung began showing customers last August provide 16 GB in a package designed to go directly into a laptop hard-drive bay. It’s worth noting that even cheap laptops are now shipping with 40-GB hard drives, and that 80-GB hard drives are fast becoming the standard, according to Gordon F. Hughes, associate director, Center for Magnetic Recording Research, University of California, San Diego.

So you’ve got to admire the chutzpah of Chang-Gyu Hwang, Samsung’s Semiconductor Business Division CEO, who on 12 September 2005 essentially declared the end of the magnetic hard drive. “NAND flash will eventually replace other storage media, especially those used in mobile products, creating a ‘flash rush,’ as NAND continues to register an unprecedented surge in demand as the backbone of the mobile electronics era,” Hwang asserted at a press conference at the Shilla Hotel in Seoul. Hwang’s prediction is the latest in a long history of forecasts of the imminent demise of the hard-disk drive.

“Samsung is out thumping their chest saying...we’re going to bury disk drives,” says Larry Swezey, deputy general manager of Hitachi Ltd.’s Mobile Hard Drive Business, whose 1-inch drive was spurned by Apple Computer Inc. in favor of Samsung’s NAND flash for the iPod Nano personal music player. Samsung says that it will ship 32-GB SSDs next year. “What they don’t mention,” adds Swezey, “is how much the 32 GB will cost”—anywhere from US $2200 to $5000 today, depending on the specific application.

Currently, NAND flash costs about $45 per gigabyte; at that price, just the raw memory for a 32-GB drive would cost $1440. But that raw memory is only one component in the SSDs on the market today, which also include a controller loaded with specialized software that arbitrates read, write, and erase cycles; checks for bad blocks; corrects for bit errors; and runs algorithms that ensure that the same data isn’t written in the same place twice, reducing wear and increasing lifetimes.

In addition, there is the packaging to make the flash-based memory fit into a conventional hard-disk-drive bay, as well as the serial ATA connector that makes the flash drive appear as a hard-disk drive to the computer. All that adds up to at least another $30 to $75 on top of the raw flash cost, according to Esther Spanjer, director of technical marketing for M-Systems Inc., with offices in Sunnyvale, Calif., a leading maker of flash-based solid-state disks. Throw in a healthy markup and you’ve got SSDs that cost thousands of dollars for relatively low capacity.

Now consider the alternative: a garden-variety 60-GB hard-disk drive, which costs around $150. Even allowing that prices for flash memory will continue to drop about 35 percent annually, it will be seven years at least before you’ll be able to buy 60 GB of raw NAND flash for a similar price. Next year, 200-GB hard-disk drives are expected to be available for less than $200. Hard-drive makers are switching over to the new perpendicular recording technology, which promises to cram at least 200 billion bits into each square inch, twice the density possible with current longitudinal writing technology. That promises to keep hard drives way ahead of flash drives in terms of density and price for years to come.

Why are solid-state flash drives so shockingly expensive relative to hard drives? The capacity of a flash memory chip depends simply on how many transistors can be packed onto the chip. So raising capacity means turning to ever more advanced chip fabrication equipment. Indeed, Samsung is investing $33 billion in its Hwaseong Semiconductor Plant, with eight new fabrication lines (an undisclosed number of them devoted to flash) due to come on line between the end of this year and 2012. The company’s next generation of NAND flash chips, which go into production by year-end, will contain 16.4 billion transistors, thanks to line widths of 50 nanometers.

The window of opportunity to recover the capital costs associated with such cutting-edge process technology is vanishingly small. Samsung’s Hwang, an IEEE Fellow, stated in the November 2003 Proceedings of the IEEE that in NAND flash, transistor density doubles every 12 months, from 256 megabits in 1999 to 8 Gb in 2004. But the cost per gigabyte of flash, while falling 30 to 40 percent per year, has stayed sky-high relative to that for hard drives and will remain so for the foreseeable future.

Price isn’t the only advantage hard drives have over flash drives. They also win on performance. The read/write speeds on hard-disk drives in most notebooks tend to be faster, too, up to 80 megabytes per second for a 2.5-inch disk spinning at 7200 revolutions per minute. Samsung’s SSD has a respectable read speed of 57 MB/s but a downright poky write speed of 32 MB/s. “The write speed is the bottleneck in flash,” says Krishna Chander, senior storage analyst for iSuppli Corp., Santa Clara, Calif. The latency isn’t noticeable to the casual iPod Nano user, “[b]ut in a computer environment, when you’re plugging an SSD into a notebook, desktop, or mission-critical enterprise system, you will notice the difference,” Chander notes.

Over the last decade, SSDs have found their niche in battlefield laptops and warplanes, which demand rugged memory modules capable of withstanding extremes of temperature, shock, and vibration. Pioneering companies like BitMicro Networks Inc., in Fremont, Calif., and M-Systems Ltd., in Kfar Saba, Israel, have done well in a market where their military customers care less about cost than they do about reliability.

The opposite holds true for someone who is buying a laptop for, say, a college-bound student. Those buyers are looking to get the most memory for their money, and flash’s special features, such as exceptional durability, aren’t likely to sway them. IDC’s Crystal notes: “Consumers...are basically trained to realize that you probably shouldn’t throw your laptop across the room.” But while it will be years before consumers adopt SSDs, Crystal adds that these drives, including those from Samsung, will prosper in niche markets.

Samsung’s Don Barnetson, associate director of flash marketing, insists that someone other than military procurement officers will find value in SSDs’ ruggedness, low power consumption, and speed at start-up. Besides enjoying an extra half-hour of battery life, “a notebook with a solid-state disk boots Microsoft Windows in about half the time that a normal hard-disk drive does,” says Barnetson, or about 30 seconds rather than 1 minute. “We think it provides a lot of value to the end user, and some people will be willing to pay for that.”

Even so, a source close to Samsung’s SSD project says the company’s SSD isn’t going to set the world on fire, at least not for a while: “I don’t think you’ll be going to your local Fry’s or Best Buy and find a whole lot of notebooks with SSD in them” this year.

Flash “Disk Drives”

Goal: Replace hard drives with flash-based solid-state disks.

Why It’s a Loser: Solid-state disks are extremely expensive compared with magnetic media.

Organization: Samsung Electronics Co.

Center of Activity: Seoul, South Korea.

Number of People on the Project: Not available.

Budget: Not available.