There's a lot of sizzle with this STEC
The charmed life of a disruptive firm
Analysis For HDD manufacturers the whirlwind, the silicon sandstorm, has literally come out of the desert, the Iranian desert as it happens. In the shape of STEC, a booming Californian company with greatness being thrust upon it, the hard disk drive (HDD) triumvirate of Hitachi GST, Seagate and Western Digital face the biggest disruption they could imagine with, potentially, their products being replaced by flash memory-based solid state disks (SSD).
Other HDD manufacturers such as Samsung and Toshiba have flash memory product capability. The three above do not.
Brothers Manouch and Mike Moshayedi came from Iran and started up a structural engineering consultancy in Santa Ana, Orange County, CA, in 1990. Then they switched and started a business, Simple Technology Inc, designing and selling computer memory modules. Younger Mark Moshayedi, an electrical engineer, joined them in 1993.
Simple Technology prospered and bought Cirrus Logic's flash controller operation in 1994. This marked its entry into the flash memory business and it started selling its first flash drive products in 1995. These were for consumer electronic devices. It bought SiliconTech Inc. in 1998 and obtained a business flash memory customer base and operation.
In 2000 the company went public and renamed itself SimpleTech a year later. Two more acquisitions followed: San Jose-based MemTech SSD Corporation, making SSDs and controller chips in 2005; Gnutek Limited in Great Britain in 2006. The very next year it opened a manufacturing, design and test facility in Malaysia. There are now 250 employees at that site.
In the same year Simple Tech sold its consumer flash business to Fabrik Inc of San Mateo, renamed itself STEC, and focussed on business flash memory products. At that point Mike Moshayedi resigned from the business leaving Mark Moshayedi as president and chief operating officer and Manouch Moshayedi as CEO. They both own STEC stock: Manouch Moshayedi has a 12% stake; Mark Moshayedi has a 4% stake.
The business, headquartered in a pair of smallish offices in a Santa Ana business park, made sales of $190 million last year, with flash SSDs contributing nearly $110 million. Its current valuation is $595.21 million, reflecting its status as the curerent king pin in the flash SSD business.
STEC makes its flash drives from bought-in flash memory chips. It mounts these on printed circuit boards, adds controllers, encloses them and sells them to server and now storage array manufacturers. IBM and Dell take flash drives for servers, EMC takes STEC drives with a Fibre Channel interface for its Symmetrix arrays. Other possible STEC customers are Hitachi Data Systems, HP, and Sun.
STEC is not involved in selling flash drives to notebook manufacturers. It's big win is the provision of controllers with a Fibre Channel interface, meaning its SSDs can fit into a Fibre Channel storage array's 3.5-inch drive slot. No other flash SSD supplier can do this.
Next page: Seagate