Covering the digital giants, by Jon Fortt
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March 17, 2008, 8:25 am

Flash vs. hard drive battle heats up

Lenovo X300
Lenovo’s critically acclaimed ThinkPad X300 laptop does without a hard drive. Image: Lenovo

While munching on a reuben at Birk’s, a steakhouse in Silicon Valley, Seagate (STX) CEO Bill Watkins is explaining why he’s not too worried about a these trendy new laptops that have everything but a hard drive.

On the surface, this would seem to be a big problem. Seagate, after all, is the world’s largest hard drive maker with expected sales of more than $3 billion this quarter – so Watkins likes to see his wares go into more gadgets, not fewer. It’s easy to see why he tends not to favor devices like Lenovo’s sleek ThinkPad X300, which is winning raves for its light weight and silent operation, and its 64-gigabyte flash storage drive.

And the X300 isn’t the only laptop that’s doing without a hard drive in favor of a flash solid state drive, or SSD. A version of Apple’s (AAPL) MacBook Air also comes with 64 gigabytes of flash. And there are other defectors, like the diminutive Eee PC from ASUS.

But the key thing, Watkins argues, is that SSDs are just too expensive, and will be for a long time. Just look at the MacBook Air. There are two versions of the Apple laptop, one with an 80 GB hard drive for $1,800, and one with a 64 GB SSD for $3,100. Why pay so much more for less storage? It’s not a difficult choice.

“Realistically, I just don’t see the flash notebook sell,” Watkins says. “We just don’t see the proposition.”

But in case flash prices continue to plummet and the flash drives really do catch on, Watkins has something else up his sleeve. He’s convinced, he confides, that SSD makers like Samsung and Intel (INTC) are violating Seagate’s patents. (An Intel spokeswoman says the company doesn’t comment on speculation.) Seagate and Western Digital (WDC), two of the major hard drive makers, have patents that deal with many of the ways a storage device communicates with a computer, Watkins says. It stands to reason that sooner or later, Seagate will sue – particularly if it looks like SSDs could become a real threat.

Watkins might want to keep his lawyers on speed dial. The price of flash has been dropping so fast that it’s surprising even the pros. Intel CEO Paul Otellini had to promise investors earlier this month that he wouldn’t let the losses from Intel’s flash businesses sink the whole company’s profits, after flash prices greeted 2008 by dropping almost twice as fast as the company expected, leaving Intel saddled with a lot of devalued inventory.

To shore up its flash business and boost sales volumes, Otellini said Intel will push more aggressively into the SSD market in the second half of the year – and it’s not hard to imagine what could result. If Intel starts pushing low-cost SSDs for laptops, rivals such as Samsung and SanDisk (SNDK) could easily respond with a price war, with all of them competing to get Hewlett-Packard (HPQ), Dell (DELL) and other major laptop makers to buy up their flash inventories.

So if a more intense SSD price war does flare up, will flash prices drop far enough to rattle Watkins? It might be unwise to bet against it. In a presentation for media and analysts earlier this month at Samsung’s Silicon Valley office, executives at the flash memory leader strongly hinted that they’re willing to see flash prices drop even more steeply this year, if it means wrestling more laptop business away from hard drive makers.

This much seems certain: Things will only get wilder in the storage world this year, especially for laptop buyers and patent lawyers.

hard drives are not dead, and they continue to gain massive R&D expenditures, ATA and perpendicular recording are two off the top of my head.

Plus, the way data is sorted and store dis essential in reliable, fast data storage. If memory companies are using Seagate’s sorting and storage code, they certainly should have to purchase a license.

Posted By Dias, Seattle, WA. : April 14, 2008 6:29 pm

Back in the 80’s and early 90’s, I was aghast at how big some of the software was getting (from 10’s of kilobytes to a megabyte or more per binary!!) Now, it’s hundreds of megabytes. So what’s taking up all that room? …Not the code; it’s the fluff. Software will get smaller when you start taking away associated macro languages and pretty GUIs. …In other words, forget it.

Posted By Mike Schwager, Chicago, IL : March 24, 2008 4:28 pm

1. Check the grammar. It doesn’t quote Watkins saying he will sue. It says that seems reasonable. Every HDD maker has patents in this area. Watkins is just more fun to talk to.
2. The customers (us) always decide when it’s right to buy alternative technology. If you want an SDD today, buy it, but then don’t whine about it being expensive, small, and slow.
3. R&D on HDD stopped? When? If R&D had stopped, we wouldn’t see 1 TB drives for US$250.
4. The need for more storage is increasing. Whether this applies to your own photos, video, & music, or to the servers we download from, or to the businesses that continually expand their record keeping requirements. Seems like a good idea to store all that data on high capacity, inexpensive devices. Even though those have (shudder) moving parts.
5. Do you believe HDD manufacturers will never offer SSDs? Samsung already offers both SSDs & HDDs. Also, Samsung has refused to negotiate selling their HDD business. :)

Posted By Qicmee, Minnesota, US : March 20, 2008 5:43 pm

Did he just say that he will sue if SSDs threaten Seagate’s business? Wouldn’t that count as malicious abuse of judicial system?

Posted By Cyrax, Seoul, Seoul : March 19, 2008 10:52 pm

Actually (Tony) the wave of the future is supposed to be applications run off online servers. (Which carries its own risk)

True that flash prices are coming down, but even without moving parts, those little thumb drives sure don’t long. Are they more secure inside the case?

Posted By trollfighter : March 19, 2008 10:50 pm

Hard drive will continue to have a couple of advantages for the near future (3-? years). It is exceptionally cheap and nearly limitless on read/write cycling. Down side is mainly… power usage… always a big issue on notebooks.

Desktop, it will never be a decision. On a note book one must realize that data gets written and read numerous time within a session (just listen to a loaded old drive). Flash has a limited number of “cycles”.

I have felt for a long time that the best computer would have a hard drive and a flash ready to “mimic” the system status. Shutdown copies over to flash, reboot occurs in a tenth of the time. Small power backup would also save session and current work..

Best wishes, Curbie

Posted By Curbie, Boise, Idaho : March 19, 2008 10:18 pm

Flash memory is the future, and has already seen performance gains before new technologies are to be introduced. The low heat, low noise, and durability of the ssd’s are much more sensible than the larger hard drives of today. They make perfect sense right now, and are a no brainer in the future.

Posted By Patrick Dalton MA : March 19, 2008 4:22 pm

Flash is coming to a brick wall: it’s called “Hot Carrier Injection Reliability Failure”. This is why there are a half dozen radically new memory technologies currently being worked on and none of them is entirely proven.

This is also why he is saying that he isn’t worried: Flash is doomed and it’s a free-for-all for what will replace it. Since nobody knows, Seagate is no worse off than anyone else in this respect. Worrying too much about it is foolish - I’m sure he worries about just enough.

Posted By Jeff, Silicon Valley : March 19, 2008 2:19 pm

So they are going to sue to keep innovative SSD manufacturers from taking too much market share… that’s just great.

Posted By Ron Dallas TX : March 19, 2008 10:19 am

I know why people will pay more for less space. When your 250GB drive dies with all of your photos and music, you will be very unhappy. Moving parts bring big problems. Plus, backing up 32-64GB is much easier than 250-320GB. I just makes sense to have solid state in a laptop or portable device.

Posted By Fred, Chicago IL : March 19, 2008 9:37 am

So his choice is to sue instead of innovating. Score another one for the wonderful American patent system and patent lawyers. The only loser will be the consumer.

Posted By Vincent Clement, Toronto, ON : March 19, 2008 9:19 am

“Why don’t the software manufactures work on programs that don’t require so much storage space.”

What you are really trying to suggest is that people stop downloading pr0n. Aint gonna happen.

Posted By Tony, London : March 19, 2008 8:38 am

The comment about an infringing patent right and the possibility that Seagate may sue if the this becomes to heated is just wrong. Talk about a sore looser if you cann’t have it your way then hurt someone, That pretty much sounds like what my 6 year old does not the CEO of a large company course I can’t be to surprise from what I have see business is run by a buch of little kids anyways.

Posted By Bob, Indianapolis Indiana : March 19, 2008 7:49 am

CEO’s are only interested in earnings-whether it be per share per quarter or otherwise. Why embrace flash drive technology when you can keep flogging spinning magnetic drives which are basically dead tech from the 50’s and continue to squeeze money from it. The R&D on magnetic drives has been eliminated for a long time now and this is about “clear” profit taking. I hope responsible flash drive makers respond with large affordable, reliable flash drives that drive the irresponsible conventional hard drive makers into submission.

Posted By Peter, detroit MI : March 19, 2008 7:05 am

Ken from Chicago - Thank You for the WDP 250 info. I have a full-size WD 160gb now, but need another and was looking to buy a full-size. Didn’t know they had such small 250-320gb drives, this is great. I’m buying one, this Spring. I appreciate the FYI.

btw - it’s a matter of time until Flash drives take over as the price drops. you cannot stop progress. and i agree software is wayyy too bloated/fat these days, it’s ridiculous and you need a top speed/memory machine to run most programs now.

Posted By Travis, Fremont, CA : March 18, 2008 3:43 pm

however when Apple replaced the HDD with a Flash drive in its iPods they did at a time when Flash drive prices dropped to 2x the cost of an HDD drive holding equal capcity. so SSD prices may not necessarily need to drop to reach parity with HDD’s for mass-scale replacement of HDD’s with SSDs in laptops

Posted By Shehara, Sri Lanka : March 18, 2008 12:50 am

an extra $1300 for a tiny 64GB SSD
even if this came down 10 or 20%, i’d still want a much larger drive for my laptop

Posted By Nate, Adelphi, MD : March 17, 2008 6:23 pm

With the speeds internet is now working, you’ll have all your big file on a PC at home, and have just a small silent-light-wight (SSD) drive on all your other portables.

Posted By Amir, Tel-Aviv, Israel : March 17, 2008 3:28 pm

As you suggested…the bloat-ware is an industry scam. Waste memory and sell more chips. Why do you think Vista runs so slow and is built on waste…to force and mandate the purchase of new machines that have to be faster.

Posted By George, Tampa, FL : March 17, 2008 11:35 am

I’m not sure why people would pay more for less, but for $139, Western Digital Passport 250 Gig portable hard drive (about the size of a thin original I-Pod , allows you to take along more storage than you’ll ever need. It comes in different sizes up to 320 Gig.

Posted By Ken Cicago, IL : March 17, 2008 11:28 am

Why don’t the software manufactures work on programs that don’t require so much storage space.

Posted By Zepper, Lewistown, IL : March 17, 2008 10:27 am
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Jon ForttA senior writer for Fortune, Jon Fortt focuses on technology and innovation in Silicon Valley - a subject he's been reporting on since his days as a rookie reporter for the Lexington (Ky.) Herald-Leader. Before joining Fortune in 2007, Jon had reporting and editing stints at Business 2.0 magazine, and the San Jose (Calif.) Mercury News, Silicon Valley's hometown newspaper.
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