In January, storage provider SanDisk (NASDAQ:SNDK) announced ULLtraDIMM, a new form of flash storage that promises drastic speed increases for high-performance applications. SanDisk already has one big customer, IBM (NYSE:IBM), for its ULLtraDIMMs, giving some early validation to this new technology. Let's take a closer look at ULLtraDIMMs and the effect they might have on the industry.

A bit of background
Storage, such as flash SSDs or hard disk drives, typically sits far away from the CPU and main memory. This means that there is latency due to the time it takes data to travel between the storage device and the CPU. For hard drives, this is not particularly relevant because their own internal latency is much greater than the transport latency. However, for flash, which is completely electronic and therefore much faster than hard disks, this becomes an issue.

The first approach to reducing this latency was to move flash from the drive and onto the PCIe communications bus, a step closer to the CPU. This provided an improvement, but it is not the optimal solution. PCIe still has latency compared to the memory bus, which sits right next to the CPU.

The new technology
Enter SanDisk's ULLtraDIMM, a flash storage that connects directly to the memory bus through the DIMM form factor, just like DRAM memory. Connecting to the memory bus gives ULLtraDIMMs a write latency of under 5 microseconds, compared to around 50 microseconds for PCIe SSDs. The shorter communication distance also means less power consumption, a crucial concern in densely packed enterprise servers.

Sandisk currently provides 200 GB and 400 GB ULLtraDIMMs, and users can add as many ULLtraDIMMs as they have memory slots. ULLtraDIMMs are implemented in a way that makes them look like a normal storage device to the operating system, but achieving this requires modifications to the BIOS which mean that ULLtraDIMMs are not yet plug-and-play devices.

Current and future applications
IBM has already signed up as a customer for Sandisk's ULLtraDIMMs. The enterprise giant has added some functionality to ULLtraDIMMs and rebranded them as eXFlash memory-channel storage. The new technology is available in IBM's X6 family of servers.

According to SanDisk and IBM, memory-channel storage will be useful for applications such as big data analytics, transactional databases, high-frequency trading, and virtualized environments. So far, it seems that IBM's X6 servers have been particularly popular with Wall Street firms. Speaking with EnterpriseTech, SanDisk senior director of marketing Brian Cox said, "we have all kinds of hedge funds begging us to deliver this."

What this means for the industry
It will take several more computer manufacturers to sign on in order to fully validate ULLtraDIMMs as a technology and to reveal the applications where it might best be used. SanDisk's management said that this will require evangelization and a surrounding ecosystem, and that they are continuing to invest in order to bring ULLtraDIMMs to wider adoption.  

Revenue from ULLtraDIMMs is estimated to be small in 2014. However, if ULLtraDIMMs catch on, competitors such as Micron (NASDAQ:MU) (which is increasingly focusing on providing SSDs rather than selling chips as a commodity) will certainly follow with their own versions of memory bus flash. Currently, no other major flash provider is talking about this kind of technology; this means that SanDisk will have first-mover advantage for at least a few quarters.

It's also not clear yet to what extent memory-channel storage might displace PCIe or server-side flash. If the total cost of ownership for an ULLtraDIMM is comparable to or lower than current SSDs, the technology might eventually become the dominant form of flash storage. However, it is also possible that ULLtraDIMMs will complement rather than replace other forms of storage, much like flash itself did with hard disk drives in the enterprise space.

In conclusion
SanDisk has introduced a new form of flash storage called ULLtraDIMM, which sits right next to the CPU on the memory bus and provides much smaller latencies than existing solutions. In a partnership with IBM, ULLtraDIMMs have been shipping to enterprise customers, with expected applications such as high-frequency trading. While the technology certainly sounds promising and might be valuable for both SanDisk and IBM down the line, it's still too early to tell what effect this will have on the storage industry and enterprise computing in general. 

Warren Buffett: This new technology is a "real threat"
At the recent Berkshire Hathaway annual meeting, Warren Buffett admitted this emerging technology is threatening his biggest cash-cow. While Buffett shakes in his billionaire-boots, only a few investors are embracing this new market which experts say will be worth over $2 trillion. Find out how you can cash in on this technology before the crowd catches on, by jumping onto one company that could get you the biggest piece of the action. Click here to access a FREE investor alert on the company we're calling the "brains behind" the technology.

Srdjan Bejakovic has no position in any stocks mentioned. The Motley Fool owns shares of International Business Machines. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.