Intel (NASDAQ:INTC) wants to close the gap with Samsung (OTC:SSNLF) in flash-based storage drives, DigiTimes reported. According to the report, Samsung has about 30% revenue share in the market for solid-state drives. Intel (NASDAQ:INTC) and SanDisk (UNKNOWN:SNDK.DL), according to DigiTimes, both have less than 20% market segment share.
Those market share dynamics might change as soon as 2016.
New technology and price cuts could drive share gains
DigiTimes' sources said Intel's latest batch of solid-state drives -- the Intel SSD 750 series -- coupled with price reductions on older-generation drives might allow Intel to start closing the revenue-share gap during the second half of this year. The sources went so far as to say Intel could have a chance of surpassing Samsung next year.
The article noted that Intel has a lead in enterprise-oriented solid-state drives (backing up the chipmaker's claim to this effect during its late-2014 investor meeting). However, given that Intel isn't leading the overall solid-state drive market, the company is clearly behind in the lower-margin, more-commoditized, consumer-oriented side of things.
Why might Intel get more aggressive now?
Intel has been in the solid-state drive market for quite a while; in fact, its X25-M solid-state drive (launched in 2008) was praised by AnandTech as having "redefined the performance of the MLC SSD." However, over the years, as the market has grown more price competitive, Intel has seemingly been less aggressive in trying to capture share; its focus instead seems to have been on high-end desktop and data center drives.
If it's true that Intel intends to be more aggressive in trying to gain share, the question worth asking is, "why?"
My best guess is that Intel might view solid-state drives as an opportunity to capture more content share within PCs. After all, if the market for PCs is expected to be flat-to-down, the company can't count too much on unit growth to try grow sales. The market is also unlikely to tolerate price hikes.
By capturing more content per laptop and/or desktop, Intel can potentially grow its PC-related revenue even in a flat market, or keep revenue stable in a slightly down market.
How big is the potential opportunity?
According to Intel's 2014 investor meeting, the market for solid-state drives exceeded $12 billion in revenue. Furthermore, Intel showed a slide forecasting that solid-state drive market penetration will hit 50% by 2018, suggesting the opportunity once SSDs have fully penetrated the market could be substantially larger than it is today.
Intel has strong competition in this market, though, so I wouldn't get too crazy with market segment share assumptions. However, even if Intel winds up with "only" 20% share when all is said and done, overall solid-state market growth could solidly boost to the company's top and bottom lines.
As a long-term investor in Intel stock, I will keep an eye out for what management has to say about the solid-state drive opportunity, and any potential changes to its strategy, at the company's investor meeting in November.