Enterprises Embrace All-Flash Arrays for Storage, EMC & Others Take Notice

Disk storage giants are left with no choice but to build, buy or partner with companies specializing in flash technology as enterprises are shifting storage needs quickly. As a result, all-flash storage arrays are starting to be offered as a replacement for enterprise primary data disk drive arrays and threaten storage giants like EMC (NYSE:EMC), HP (NYSE:HPQ), IBM (NYSE:IBM), Dell (NASDAQ:DELL) and NetApp (NASDAQ:NTAP) that need to act quickly to develop or acquire the new technology.

We have a price estimate of $37.60 for EMC which is about 75% ahead of the market price. Below we look at some of the trends in storage that are shaping the industry and will impact players like EMC.

All-Flash Technology Catching up

Nimbus, an all-flash storage array supplier, outmaneuvered incumbents NetApp and 3PAR to close a deal with eBay for 100TB of flash storage to accelerate the firm’s server virtualization work earlier this month. ^[1] Pure Storage, an enterprise storage focused firm, released its FlashArray FA300 series which is an all-flash storage array promising to be ten times faster and ten times smaller than hard-disk-based systems. ^[2]

Disks are Dated – Cash is in Flash

Flash memory does not have the physical limitations of hard disk drives and they keep better pace with processors. In short, flash is a better technology that now has become cost effective enough to be adopted on a mass scale. As is the case with most new technologies, there is resistance from business customers that are reluctant to change due to the huge spending involved.

However the cost-effectiveness and higher efficiency offered by flash storage is so large compared to disk storage – something akin to comparing smartphones are to normal cell phones – that their adoption is likely to be rapid once enterprises and the technology is ready. This coupled with the fact that big businesses have to cope with increasing computing workloads in server virtualization environments and cloud computing, that soon disk storage will look outdated.

Total Disk Storage Systems Market (in GB) has witnessed tremendous growth in the past making disk storage one of the fastest growing industry in the tech sector. Flash arrays could disrupt this high growth in the future.

Flash Prices Coming Down, Little Time Left for Disk Storage Vendors

All the major disk storage vendors have so far banked on storage array flash caching designs – such as accelerator boxes in front of the array, flash cache in the array controller, and solid state drive (SSD) in arrays. The flash cache basically stores frequently accessed or hot data in solid state storage in the controller and read access to that data is up to 10 times faster. ^[3]

However these are likely to be replaced by all-flash direct attached storage (DAS) or all-flash NAS/SAN as new players like Pure Storage, Nimbus and Fusion-io introduce users to all-flash.

While in the past all-flash storage vendors have competed on the idea that they outperform spinning disk arrays, they do cost a lot more on a $/GB basis. But numbers from Nimbus’s recent deal with eBay showed that flash arrays can beat disk systems from players like NetApp and 3PAR on the performance fronts and compete on the cost of the usable storage capacity as well, which could signal an inflection point in the industry. ^[4]

Another Round of Storage Acquisitions on the Cards

We expect the transition to enterprise flash to be a rapid one and foresee another round of acquisitions in the storage sector. However it plays out, the business scenario is going to get much more competitive in the near future for leading disk storage systems vendors, though not without lucrative business opportunities to exploit.

See our full analysis for EMC

1. Nimbus Data Adds Flash To eBay, Intros New Flash-based Primary Storage, crn.com [↩]
2. All-flash enterprise storage startup ready (and funded) for battle, physorg.com [↩]
3. FLASH: The Disruptening, channelregister.co.uk [↩]
4. eBay backs Flash new boy for storage, channelregister.co.uk [↩]