Intel Corporation’s PCIe SSDs Is a Big Threat to Storage Products Manufacturers

Intel (INTC 0.64%) and Samsung were some of the notable hardware companies that unveiled new products during Computex 2014. Intel unveiled its Solid State Drive Data Center Family for PCIe: DC P3500, DC P3600, and DC P3700 that are designed to work with its Xeon processors. The new SSD drives will work with Intel's Non-Volatile Memory Express (NVMe) storage interface that lowers latency. The PCI Express interface delivers blazing speeds that are perfect for data centers and high-performance PCs.

Meanwhile, Samsung was less concerned about performance and launched its 854 DC EVO lineup that uses old-tech SATA 6GB/s interface and the Samsung TLC NAND Flash memory. The SSD drive, however, is quite power-efficient and consumes just 25% of the power consumed by a comparable HDD.

Where do these moves leave enterprise storage products manufacturers Western Digital (WDC -0.53%) and Seagate Technology (STX)?

Real threat
SSD technology has certainly come along nicely, despite still being in the shadows of its more pervasive HDD brethren. Enterprise storage manufacturers such as Western Digital and Seagate Technology ship far more HDDs than SSDs. The SSD market is still quite small; just $3.8 billion worth of SSDs will be shipped in fiscal 2014, or about 12% of the $32 billion HDD market. The SSD market will, however, grow at a much faster clip than the HDD market -- 21% CAGR through 2018 vs. 0.13% for HDD.

SSDs connect to other media through two main technologies: SATA6, such as Samsung used in its EVO drive lineup, and PCIe (peripheral component interconnect express), such as Intel used on its recently unveiled SSD products. PCIe was originally developed to handle any type of internal card imaginable, ranging from video cards to sound cards and beyond. Additionally, each of the standard channels handles data moving in two opposite directions. This means that the standard bandwidth has to be extremely high. A single PCIe 3.0 lane can handle almost 1GB of data per second, meaning that a 4x slot can handle up to 4GB. A PCIe, in turn, can have 16 lanes, equal to almost 16GB of bandwidth. In comparison, a SATA6 can only handle up to 6GB max.

In 2008, Intel launched the first consumer HDD, the X25-M, and kicked of intense competition in the space. The best HDDs at the time, however, could hardly saturate a single SATA connection. Even early SSDs could hardly saturate a single SATA3 port.

Disk drive speeds have been rising sharply in recent years, however, and PCIe technology with its superfast data transfer capabilities now seems a perfect fit for SSDs. SATA technology simply cannot keep up with the fast advances of SSD technology and is acting as a bottleneck for drive makers as they strive to extract maximum performance from their hardware.

The current crop of available PCIe drives is quite thin, with companies such as Plextor, Asus, and VisionTek being some of the notable vendors. Intel's SSD Family for PCIe offer high performance at very competitive prices compared to what is available in the market. For instance, the ASUS Raidr retails at $349 for just 240GB of storage. Intel's high performance at fair prices SSDs are likely to quickly gain market traction and give Intel a big leg up its competitors.

Source: DigitalTrends

Western Digital unveiled its hybrid PCIe SATA 6GB SSDs during the Computex event. The upshot of this drive is that it can connect directly to existing SATA interfaces and delivers up to 1GB/s, as compared to just 600MB/s for SATA3. Although Western Digital also demonstrated a 4TB drive, this is a hybrid drive consisting of 4TB mechanical HDD and a 128 GB SSD storage.

The performance of Western Digital's hybrid PCIe drive falls far short of the 2,600 MB/s for sequential reads for Intel's mid-range DC P3600 800GB model, or 2,800 MB/s for sequential reads for the DC P3700 800GB model.

Seagate did not unveil any new SSD PCIe products at Computex. However, the company could be busy working behind the scenes since the flash business it acquired from Avago has plenty of PCIe expertise.

Western Digital expects to sell 62 million consumer electronics and external storage units in fiscal 2014 at an ASP of $62 and a gross margin of 36%. 2014 sales for the segment should therefore hover around $3.84 billion. Growth is expected to be a modest 4% CAGR through 2020. However, unlike the HDD unit where the ASP is on a free fall, the segment's ASP is expected to only fall slightly to $61 while the gross margin is actually expected to increase 200 basis points to 38%.

Meanwhile, Seagate expects to sell 51 million consumer electronics and external storage units in fiscal 2014 at an ASP of $71, thus yielding sales of $3.62 billion in fiscal 2014. Although the company expects the number of units sold by the segment to grow at a CAGR of 7.8% through 2020, this might unfortunately be accompanied by a large decline in gross margin from the current 27% to 21%.

Conclusion
Western Digital and Seagate Technology seems to be a bit behind the curve as far as PCIe SDDs go. It will be quite difficult for the two to compete with a company like Intel which not only has launched pure-play PCIe SSDs, but has done so at very competitive prices as well.

The brighter part of the story, however, is that the two still have ample time to come up with better products before PCIe drives become the de facto SSD standard.