Solid-State Disk Technology

GLGi: Solid-State DiskTechnologies, Applications & Market

Opportunities, Forecast & Risk

Robert WitkowPresident

Westwood Marketing, LLC

© 2008 Gerson Lehrman Group Inc., All Rights Reserved

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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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 SSD’s are essentially arrays of flash memory devices which include a controller that electrically and mechanically emulate, and are software compatible with magnetic HDD’s

SSD & Key Components Overview

• NAND Flash

• ControllerCaptive IP DevelopmentSilicon Motion (NASDAQ: SIMO)Hyperstone (sub. of CML Microsystems, LSE: CML.L)Phison (TSE: Phison Company 8299)IP Goal Microelectronics (Private Company – Chengdu, China)

2007Revenue

2007Share

2006Revenue

Sequential Growth

Samsung $5.86 42.1% $5.61 4.5%Toshiba $3.88 27.9% $3.22 20.5%Hynix $2.38 17.1% $2.19 8.7%Micron $0.85 6.1% $0.36 136.1%Intel $0.41 3.0% $0.11 272.7%ST $0.31 2.2% $0.21 47.6%Renesas $0.21 1.5% $0.59 64.4%$US Billions

SSD - HDD Technical Comparison

Overv

iew

Price

Seek

Time

Laten

cy

Read T

ransf

er

Writ

e Tra

nsfer

Shock Power

Consum

ption

$199.99 8.9 ms 4.2 ms 85 MB/sec. 85 MB/sec. 65 G 9.9 W

HDD 7200 RPM 750 GB 3.5” SATA

SSD N/A 64 GB 3.5” SATA

$199.99 8.9 ms 4.2 ms 85 MB/sec. 85 MB/sec. 65 G 9.9 W

$1,769.00 0.1 ms 0.0 ms 60 MB/sec. 45 MB/sec. 1500 G 2.1 W

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. Won’t 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 2007’s $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– STEC’s differentiator is its in-house controller technology – Margins could be pressured as competitors improve product performance – 23% of 2007’s $188.7 million revenue came from SMART Modular

SSD - Enterprise Leaders

>$100 non-NAND BOM in Enterprise SSD’s.

~$5.00 non-NAND BOM in Notebook SSD’s

<$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

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

SanDisk

•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 on-going

•All current SSD’s are built with Samsung SLC

•Forecast of Q1 ’08 MLC SSD has been pushed out to Q4 ’08

Toshiba

•Tokyo, Japan

•27.9% NAND Market Share

•Partners with SanDisk on Fab development

•$16.7 Billion SanDisk JV for Fab’s 4 and 5, which will quadruple production capacity

•To date, Toshiba has sold SanDisk designed NAND. Now starting to develop their own NAND designs

Watch List: Hynix and Seagate

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 SSD’s to soak up 20% of NAND capacity by Q1

2010

NAND Demand / Forecast

SSD, 1%Handsets, 12%

USB Flash Drives, 13%

Others, 15%

Media Players, 26%

Flash Cards, 33%

NAND Demand Drivers Q1 2008

SSD 1%Handsets 12%USB Flash Drives 13%Others 15%Media Players 26%Flash Cards 33%Total 100%

SSD Demand / Forecast

0

5

10

15

20

25

30

35

40

2007 2008 2009 2010 2011

Notebook SSD Units Desktop SSD Units Enterprise SSD Units

SSD Unit Demand Forecast2007 2008 2009 2010 2011

Notebook SSD Units 1.1 5 15 25 34Notebook Units 114 125 149 165 170SSD Penetration Rate 1.0% 4.0% 10.1% 15.2% 20.0%

Desktop SSD Units 0 0 1.5 2 3Desktop Units 160 153 150 140 120SSD Penetration Rate 0.0% 0.0% 0.0% 1.4% 2.5%

Enterprise SSD Units 0.01 0.2 0.5 0.7 1Enterprise Units 9 9 10 11 11SSD Penetration Rate 0.1% 2.2% 5.0% 6.4% 9.0%

Total SSD Units 1.11 5.2 17 27.7 37.1

Million / units

Obstacles to Adoption

• Enterprise– CIO’s 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 ComputingPrice, 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 Systems1993, 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 Memory2005, 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?