This Innovation Could Stop Flash in Its Tracks

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Thanks to the popularity of portable devices that can't afford to use spinning disk drives -- think iPods, smartphones, and the like -- we've come to believe, as an industry, that there's no stopping the rise of flash memory for replacing magnetic drives.

Perhaps that's true. But are we headed there as fast we think? Seagate Technology (Nasdaq: STX  ) has invented a way to store 1 trillion bits of information per square inch on a common disk platter, about a 55% improvement over current technology, the company said in a press release.

Initial products based on the breakthrough -- made possible with a patented process called heat-assisted magnetic recording, or HAMR -- are due before the end of the decade. Longer term, Seagate plans to manufacture 60 terabyte hard drives featuring the technology.

A flash in the pan
Solid-state drives, while cooler and generally more reliable as a result of stripping away moving parts, have thus far proved less capable at storing very large volumes of data. Enterprise SSD producer STEC's (Nasdaq: STEC  ) top drive stores 256 gigabytes of data as of this writing.

Capacity matters. So long as magnetic drives carry comparatively more data, as they do now, IT managers will keep buying them. And that, in turn, should allow Seagate and peer Western Digital (NYSE: WDC  ) to continue pumping out profits -- and a better-than-3% dividend yield in Seagate's case. HAMR shows all the signs of a blunt instrument, in other words.

For the flash industry, the timing stinks. Intel (Nasdaq: INTC  ) recently sold two of its NAND flash memory manufacturing facilities -- NAND is the basis for a number of high-performance drives -- while STEC has endured shrinking profit growth and lower returns on capital in each of the past two years.

Therein lies the irony. Flash may very well prove to be the Next Big Storage Thing. But for right now, it's Seagate rather than STEC (or SanDisk, or Intel) that's doing the disrupting.

Think I'm wrong? Weigh in using the comments box below. Or if you'd rather spend time investigating how you can profit from the cloud computing revolution that's driving data storage demand, watch this new video special report from The Motley Fool: "The Two Words Bill Gates Doesn't Want You to Hear." The research is free, but only for a limited time. Watch it now!

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's Web home, portfolio holdings, and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of Intel and Western Digital. Motley Fool newsletter services have recommended buying shares of Intel. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (3) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 28, 2012, at 5:28 AM, winklerf wrote:

    Spinning disks are on their way out. Their access time is atrocious and they are not well designed for parallel access, which is how throughput will go up in the future.

    I doubt Flash will continue to be the means by which solid state continues to provide non-volatile memory in the future. There are easier ways to hold data than tunneling and counting electrons. Magnetic ram or memristors or something similar will become the primary means of storing data long term, especially as the transistor doubling power of Moore's Law gets drives to a size that is large enough for most people, at approximately 1TB.

    One can argue that we will always need more HDD capacity, but our need for space is not growing as fast as the size of the devices and there will be a willingness to give up some space for the much better performance of solid state. By 2020 or so, the spinning disk business will be dead, dead, dead.

  • Report this Comment On March 28, 2012, at 5:03 PM, Yashinator wrote:


    I agree that flash will not be the technology that dethrones disks. The fact that increasing capacity on SSDs negatively affects their reliability combined with the cost per gigabyte, bar flash from replacing disks. The technologies mentioned (MRAM, PRAM, etc) are more similar to SSDs and will replace them before they come close to forcing spinning disks into obsolescence. Furthermore, that switch won’t occur for years because these technologies are just too immature and the investment is too significant to quickly develop factories that are able to meet current levels of storage demand. I would be surprised to see one of these new technologies garnering any market share before 2020.

    In applications where performance and throughput are valuable enough, such as booting up, an SSD can be employed. Yet for cheap storage a disk has no equal. A technology that can provide both the low $/GB of a disk but the high performance of an SSD is obviously ideal. Perhaps the hybrid solutions will continue gaining in the market.

    1TB may be enough today, but people were saying they would never fill a 500MB drive not too long ago. Even if 1TB will be enough for a personal user for years to come, consider server farms, back up storage, the cloud, etc. These endeavors require plenty of cheap storage that will keep disks spinning for decades.

  • Report this Comment On March 28, 2012, at 6:44 PM, EquityBull wrote:

    I'm in IT and I can clearly see the future in both consumer and enterprise for SSD over spinning drives.

    Traditional Drives will have a market for some time to come where capacity matters more then performance. However in many applications and uses the SSD capacity/price intersection is now more then adequate to satisfy a wide variety of real world consumer and enterprise users needs.

    For example I have a TB drive on my desktop. However I'm using only only 250GB of it. There lies the intersection issue. I'd be better off with a 500GB SSD then a 1TB or 2TB drive. Extra capacity you are not using NOW or in the near future is wasted. You are better off spending your dollars on performance.

    When the time comes someday that you need the extra capacity you can upgrade your SSD which will be faster/cheaper by then. Most applications and users don't require these huge capacities and could be better served by smaller capacity but faster and more reliable SSD's.

    In the enterprise the database performance is amazing on SSD's and the ROI a no brainer. Same with web servers and data servers that are not warehousing enormous amounts of data. For those that do need TB's then traditional is better for those applications.

    We are already seeing the transition in notebooks and desktops. Tablets will always use flash as will mobile devices. I see traditional drives as the buggy whip. Just not today but headed that way in five to ten years. Remember vinyl records, 8 tracks, cassettes and CD's?

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1847544, ~/Articles/ArticleHandler.aspx, 10/26/2016 9:47:31 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 31 minutes ago Sponsored by:
DOW 18,199.33 30.06 0.17%
S&P 500 2,139.43 -3.73 -0.17%
NASD 5,250.27 -33.13 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/26/2016 4:00 PM
STX $34.84 Up +0.57 +1.66%
Seagate Technology CAPS Rating: ****
INTC $34.92 Down -0.18 -0.51%
Intel CAPS Rating: ****
STEC.DL $0.00 Down +0.00 +0.00%
STEC CAPS Rating: ***
WDC $56.52 Up +2.89 +5.39%
Western Digital CAPS Rating: ***