Intel, Hitachi Launch Enterprise SSD Initiative

Intel Corp. (Nasdaq: INTC) and Hitachi Global Storage Technologies (Hitachi GST) on Tuesday launched a joint partnership to develop and deliver Serial Attached SCSI (SAS) and Fibre Channel (FC) enterprise class solid-state drives (SSDs) for servers, workstations, and storage systems. The move is likely to raise the level of performance, capacity, and power efficiency to new heights for enterprise SSDs. It may also transform the way that SSD suppliers manage product development risk in emerging technologies.

"Overall, this seems a logical pairing and an impressive announcement," said Mark Peters, an analyst with Enterprise Strategy Group (ESG) . "It signifies a strong 'shot across the bow' in the ensuing and intensifying SSD battleground."

Brendon Collins, Hitachi's vice president of product management, said "One of the biggest requests we have had from our large OEMs in our technology and planning meetings over the last two years has been for SSDs that complement our product offerings utilizing our existing HDD [hard disk drive] architecture. We could do it ourselves or look at acquiring a company or even partnering with someone to share fab expenses. But all of these options cost billions of dollars."

Instead, the Hitachi-Intel SSD venture combines best-of-class core competencies from two major tech vendors, with Hitachi bringing SAS and FC interface technology and a customer base and Intel furnishing 34-nanometer NAND flash memory engineering and manufacturing.

"This deal is an important indicator of things to come," said Arun Taneja, founder of industry analysis and research firm Taneja Group . "The next five years will see use of flash SSDs that is barely imaginable today."Troy Winslow, an Intel marketing manager, agrees. The Intel-Hitachi venture will let Intel "broaden its marketing strategy, because we now have an opportunity to deliver enterprise class solutions that include SAS and FC interfaces," he said. Intel will continue to develop and market its SATA (serial advanced technology attachment) product, and a combination of SATA with products from the new partnership will let Intel span the entire SSD spectrum from mainstream applications like consumer-class notebooks to enterprise-embedded and extreme SSD for high-performance computing.

"We believe that we will set new bars for SSD in the areas of performance, power efficiency, and reliability," Winslow said. "Hitachi can offer a complete line of SSDs that range from commercial to high performance computing with SAS and FC. This combines with Intel's know-how on the computing and flash memory side."

The Intel-Hitachi partnership allows both companies to share the risks of the fluctuating price points of a highly volatile NAND market that is now characterized by oversupply and depressed prices. In a co-development environment, the two organizations also share the costs and risks that are inherent in new product development.

"We've already looked at market segmentation, product positioning, cost, pricing financial models, and architecture," said Hitachi's Collins. "We also know that it's a huge mistake if our two organizations' teams are not together. The program teams all have cross-functional representation, and the co-development starts at the product requirements definition phase."

Products resulting from the partnership will be released for early sampling and testing in December 2009. It will undergo customer qualifications in early 2010 and will appear in the market in late 2010, the companies said."The impact is a 'to be seen,'" said analyst Peters. "This is because early shipments for OEM testing are likely a year away and any real shipments are not until 2010. However, what this does do is add even further commitment and impetus towards the seriousness of SSD as a significant element within overall storage strategies in the next few years."

In the meantime, both Hitachi and Intel expect some cost-of-manufacture savings from the ability to use Intel's 34-nanometer silicon and process lithography technology, which far outdistances what anyone else is doing at this time. However, they also anticipate that new enterprise-ready products will command a premium price in the marketplace by offering premium performance, while other products could end up reducing prices in other market niches.

"Intel and GST are talking about SAS and FC interfaces, obviously indicating higher performance interfaces for enterprise class products. This deal would suggest other deals are possible," said analyst Taneja.

All tech companies working on new SSD products face the same challenges: fluctuating prices, uncertain emerging markets, the cost of manufacturing and high R&D expenses. The partnership between Intel and Hitachi shows a strong commitment to a new and potential large market, and a way to share the risks and rewards. It may end up being a roadmap for other industry players.