Henry Newman on HD vs. SSD Economics

Henry Newman has an excellent post entitled SSD vs. HDD Pricing: Seven Myths That Need Correcting. His seven myths are:

• First, some assume that the price of MLC NAND flash will continue to decrease at a rapid and predictable rate that will make it competitive with HDDs for bandwidth, and nearly for capacity, by 2014 or 2015. This downward trend, it is assumed, will make flash a viable alternative for large storage and to act as a memory or “buffer” to improve performance.
• Second, there is a general assumption that prices for bandwidth ($/GB/s) for SSDs is much lower than for HDDs, and that enterprises will measure costs in these terms instead of capacity.
• Third, there is no distinction made between flash in general, such as consumer SSDs, and enterprise storage SSDs. It is assumed that MLC NAND will not only reduce in price ($/GB) but also that it will increase in density and larger capacity drives will be developed.
• Fourth, it is assumed that the quality of MLC NAND will either remain constant or increase as prices decrease and densities increase, allowing it to improve not only performance, but also reliability and power consumption of the systems it is used in.
• Fifth, it is assumed that power consumption for SSDs is, or will shortly be, significantly lower than that of HDDs overall, on a per GB basis and on a per GB/s basis.
• Sixth, they assume disk performance will grow at a constant rate of about 20 percent per generation and not improve.
• Seventh, they assume file system data layout will not improve to allow better disk utilization.

Henry is looking at the market for performance storage, not for long-term storage, but given that limitation I agree with nearly everything he writes. However, I think there is a simpler argument that ends up at the same place that Henry did:

• Flash can do everything that hard disk can, but there are many markets where hard disk cannot do what flash can do.
• The supply of both flash and hard disk is constrained. Flash is constrained because investing in new flash fabs would not be profitable, especially given the obviously limited scope for shrinking flash cells. Hard disk is constrained because the market is effectively a duopoly, and both players are struggling to transition from the current PMR technology to HAMR.
• Thus flash will command a premium over hard disk prices so that the market directs the limited supply of flash to those applications, such as tablets, smartphones, and high-performance servers, where its added value is highest.

QED.