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.
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