GLGi: Solid-State Disk

Technologies, Applications & Market

Opportunities, Forecast & Risk
Robert Witkow
President
Westwood Marketing, LLC

Council Member Biography

Robert Witkow is the President at Westwood Marketing
LLC, a company providing of business development and
market intelligence services to the flash memory industry.
He is an expert on flash memory applications for mobile
telephones, digital cameras, and other consumer
electronic devices. Previously, he served in senior sales
and marketing management positions at SMART Modular
Technologies, the leading independent memory module
manufacturer in the world, at Lexar Media, where he
managed OEM and Technology Sales and Marketing, and
at M-Systems, where as Director of Sales and Marketing
he brought the USB Flash Drive to the North American
market.
2008 Gerson Lehrman Group Inc., All Rights Reserved

Topics

Applications & value proposition

Key components & supplier overview
Market forecasts & revenue metrics
Disruptive & alternative technologies (Violin
Memory, Pliant, Texas Memory, Solid Data
System)

2008 Gerson Lehrman Group Inc., All Rights Reserved

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Gerson Lehrman Group Contacts

John Aronsohn
Vice President and
TMT Global Research Head,
Gerson Lehrman Group
850 Third Avenue, 9th Floor
New York, NY 10022
212-984-3673
jaronsohn@glgroup.com
Aaron Liberman
Managing Director, Sales and Marketing
Gerson Lehrman Group
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New York, NY 10022
212-984-3684
aliberman@glgroup.com
Carly Pisarri
Process Manager
Gerson Lehrman Group
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New York, NY 10022
212-750-1435
cpisarri@glgroup.com

2008 Gerson Lehrman Group Inc., All Rights Reserved

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Contents

SSD Technology
SSD & Key Components Overview
SSD - HDD Characteristics
Technical Comparison
SSC vs. HDD Issues

SSD Applications
Enterprise Storage
Industry Leaders

Portable Computing
Industry Leaders

Military / Aerospace

Forecast
Data Points
NAND Demand Forecast
SSD Demand Forecast by Application

Obstacles to Adoption
Alternative / Disruptive Technologies
Questions & Answers
About the Presenter

SSD Technology
A Solid-State Disk (SSD) is a data storage device that emulates a
hard disk drive (HDD)
NAND Flash SSDs are essentially arrays of flash memory devices
which include a controller that electrically and mechanically
emulate, and are software compatible with magnetic HDDs

SSD & Key Components Overview

NAND Flash

Controller
Captive IP Development
Silicon Motion (NASDAQ: SIMO)
Hyperstone (sub. of CML Microsystems, LSE: CML.L)
Phison (TSE: Phison Company 8299)
IP Goal Microelectronics (Private Company Chengdu, China)

SSD - HDD Technical Comparison

SSD vs. HDD Issues

Q. SSD access times are great, but write speeds are a step
back, so why would I want an SSD?
A. Small reads (4k) are 20X faster than similar reads on an
HDD.
Q. SSD write performance still leaves much to be desired?
R. This is where SSD manufacturers differentiate their
product.
Q. I heard that NAND performance is degrading as a result of
die shrinks and increases in bits per cell. Wont this slow
SSD performance gains?
A. Correct. Write performance problems are not going away.

SSD Applications
Enterprise Storage: Now
Portable Computing: 2010 or 11
Military / Aerospace: Legacy
Consumer Electronic Media Players are Not
Likely Candidates for SSD

Enterprise Storage
Drivers
Read Performance
Increase Network Capacity
Power Savings

SSD Manufacturers
STEC, Mtron, SMART Modular

Buyers / Market Drivers

1st tier: EMC, HP Storageworks, IBM, HDS
2nd tier: Dell, NetApp, SGI, Quantum, Sun

SSD - Enterprise Leaders

Mtron

Privately Held, 2006, Gyeonggi-Do, S. Korea

Claims fastest enterprise class SSD
Very close ties to Seoul National University and Samsung
Distribution deal with Imation who is better known for optical
Controller IP from Indilinx, founded by other SNU graduates

SMART Modular

NASDAQ: SMOD, 1985, Fremont, CA

61% of 2007s $828.4 million revenue was generated by HP & Cisco
SMART recently purchased Adtron
Close ties to Francisco Partners, Silverlake, & Samsung

STEC

NASDAQ: STEC, 1985, Santa Ana, CA

Zeus IOPS is the highest performing enterprise class SSD
STECs differentiator is its in-house controller technology
Margins could be pressured as competitors improve product performance
23% of 2007s $188.7 million revenue came from SMART Modular

SSD - Enterprise Leaders

>$100 non-NAND BOM in Enterprise SSDs.

~$5.00 non-NAND BOM in Notebook SSDs
<$1.00 non-NAND BOM in eeePC and OLPC

Portable Computing
Drivers

Power Savings
Quicker Boot
Weight
Reliability

Apple MacBook Air

$1,799 w/ 80 GB HDD
$3,199 w/ 64 GB SSD

Lenovo X300
$2,632 w/ 64 GB SSD

Dell Latitude D430

$1,726 w/ 80 GB HDD
$2,506 w/ 64 GB SSD

Asus EeePC
$349 w/ 4 GB SSD

SSD Portable Computing Leaders

SanDisk

Samsung
Gyeonggi-Do, S. Korea
42.1% NAND Market
Share
In-house SSD controller
development, supplemented
with Silicon Motion
controllers
Lowest cost model due
to highest yields, not from
the most advanced
technology
Investing heavily in
PCRAM which shows
promise in NVM and SSD
applications

NASDAQ: SNDK
1988, Milpitas, CA
2007 Sales of $3.9 billion
$17 Billion Toshiba JV Fab
CapEx through 2011
2/3 of 2007 Royalties
generated by Samsung.
Royalty renegotiation is ongoing
All current SSDs are built
with Samsung SLC
Forecast of Q1 08 MLC
SSD has been pushed out to
Q4 08

Watch List: Hynix and Seagate

Toshiba
Tokyo, Japan
27.9% NAND Market Share
Partners with SanDisk on
Fab development
$16.7 Billion SanDisk JV
for Fabs 4 and 5, which will
quadruple production capacity
To date, Toshiba has sold
SanDisk designed NAND.
Now starting to develop their
own NAND designs

Military / Aerospace
Drivers
Reliability

Annual Units <20K

Not Exciting Characterized by High Margins

Forecast Data Points

HDD Revenue: 3.5% CAGR 2006 - 2011
SSD Revenue 2007 - 2012 CAGR: 71%.
(from $373 million to $5.4 billion)
SSD Average Capacity: 40 - 45% CAGR from 2006 2011
(from 32 GB to > 200 GB)
NAND cost erosion will continue unabated:
2006 - 79.4% (Benchmark 8 Gb MLC)
2007 - 57.1%
2008 YTD - 30%

SSD and HDD pricing will near parity in Q1 2011

Expect SSDs to soak up 20% of NAND capacity by Q1
2010

NAND Demand / Forecast

SSD Demand / Forecast

SSD Unit Demand Forecast

2007 2008 2009 2010 2011
Notebook SSD Units
1.1
5
15
25
34
Notebook Units
114 125
149
165
170
SSD Penetration Rate
1.0% 4.0% 10.1% 15.2% 20.0%
Desktop SSD Units
Desktop Units
SSD Penetration Rate

0
0
160 153
0.0% 0.0%

1.5
150
0.0%

2
140
1.4%

3
120
2.5%

Enterprise SSD Units

Enterprise Units
SSD Penetration Rate

0.01
0.2
9
9
0.1% 2.2%

0.5
10
5.0%

0.7
11
6.4%

1
11
9.0%

17

27.7

37.1

Total SSD Units

Million / units

1.11

5.2

Obstacles to Adoption
Enterprise
CIOs want proof that flash memory will not wear out
Entry point of 10X the cost of magnetic or optical storage is significant
Magnetic Storage Erosion ($1.00/ GB in 2005 to $.25 in 2011)

Portable Computing
Price, Price, Price
SanDisk stated in 6/07 that significant adoption would be seen when flash eroded
to 5X magnetic
Seagate is projecting no significant adoption until NAND erodes to 2X magnetic
I recently golfed with #2 IT executive at KPMG. He has a PC/ seat budget, and is
not willing to pay any premium until hard $ savings are proven

Alternative & Disruptive Technologies

Alternative / Disruptive Technologies

Solid State Memory Appliance

Violin Memory
Pliant Technology
Texas Memory Systems
Solid Data Systems

Traditional Magnetic
Hybrid HDD
Technical Breakthroughs / Cost Erosion

Solid-State Memory Appliance

Established Players:
Texas Memory Systems
1978, Privately Held
HQ in Houston, TX

Solid Data Systems

1993, Privately Held
HQ in Santa Clara, CA

Emerging Competitors:
Pliant Technology
2006, Privately Held, Founders are Storage Industry Legends, Lightspeed
Ventures A-Round in February 2008, HQ in Milpitas, CA

Violin Memory
2005, Privately Held, RationalWave Partners is an Investor, HQ in Iselin, NJ

Questions & Answers

Which approach is going to win the Enterprise?
SSD
Memory Appliance
Traditional Magnetic

Which companies are most at risk and why?

STEC
SanDisk
Seagate

Who has the most to gain?

Seagate
Samsung
Toshiba

Your questions?