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STEC answers the billion dollar question

Market capitalisation hits ten figures

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Comment Solid state drive supplier STEC has joined the big boys, having attained a billion dollar market capitalisation.

In the first quarter of the year its net revenue was $63.5m, 25 per cent higher than the year-ago quarter. Net profit was up a strong 61 per cent at $2.9m, driven by higher product shipments. It reckons its second quarter will see revenues of $68m - $70m, up from a previous estimate of $58.2m. STEC is booming in the middle of the worst recession since the Depression.

Its share price, now at $20.92, was $4.33 in January and has risen steadily and increasingly steeply since then. It was $16.73 on June 1st, on the back of STEC's successes in broadening the takeup of its Zeus-IOPS SSDs by enterprise storage array suppliers, and enlarging the number of suppliers adopting its technology. This roster includes the first, EMC, which adopted STEC drives for is high-end Symmetrix enterprise array a year ago, and has since adopted them for its mid-range Clariion arrays. Other enterprise drive array suppliers adopting STEC's SSDs include Fujitsu, HDS, HP, IBM and Sun.

Compellent, the SME drive array supplier, has also voted for STEC, with a UK customer installation expected to be announced soon.

The only other competing drive array supplier with any success is Intel, which has notched up Dell EqualLogic, Panasas and Pillar. Hitachi GST is developing an SSD using Intel technology and HDS has indicated future support of that.

SSDs can output many, many more I/Os per second than hard disk drives and use a lot less electricity than hard disk drives would need in order to produce the same IOPS performance. A recent SPEC storage energy benchmark by IBM showed this. There seems to be no prospect whatever that HDD technology can recapture IOPS leadership. Instead, HDDs face a seemingly inevitable retreat to being used for capacity-centric data storage tiers backing up the high-speed SSD data stores.

STEC's Zeus-IOP SSD is in effect a 3.5-inch Fibre Channel, drop-in hard drive replacement. The company has SATA and SAS interface technology in its locker. Apart from Intel, it faces future competition from Seagate and Western Digital, both of whom are adding SSDs alongside their hard disk drive product ranges. Both will face either becoming second sources to STEC or having to knock it out and displace it.

Additional competition comes from Fusion-io, with its PCIe-connected ioDrive technology, which has notched up impressive demonstrations with both HP and IBM. HP is now shipping IO Accelerator cards for its servers using this technology. There is no sign that Fusion-io wants to compete in the HDD replacement market but it does have a network-connected ioSAN technology under development. With this technology, a server would front-end an ioDrive-based store and serve it up as a shared resource to other servers.

Server and storage SSD leaders

Fusion-io appears to be the potential leader in server SSD use. However STEC is supplying Sun with SSDs for use in Sun's servers, where they store, cache, system software working data. No other server vendor is using STEC SSDs in this way, perhaps because the system software needs specific altering to use such caches.

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