Feeds

SSD flag bearer to quickly hit $2bn valuation

Apex of STEC's bubble?

Designing a Defense for Mobile Applications

The solid-state drive streets are paved with gold for STEC, which is about to vault to a $2bn market capitalization.

The company's share price is hovering at a whisker below $40, and its present market capitalisation is $1.98bn. The stock appreciation has been fantastic: at the start of this year shares were a mere $4.67. The company achieved a billion-dollar valuation in June, and it's now double that and could grow even more.

But we could be watching a bubble building, with a bursting of that bubble soon to occur.

What's driving the price higher is that STEC has remained the SSD of choice for storage-array vendors following in EMC's pioneering footsteps - Compellent, Fujitsu, HDS, HP, IBM, and Sun Microsystems. It has put out bullish sales projections for its ZeusIOPS SSDs, which replace fast and short-stroked Fibre Channel hard disk drives.

The STEC SSD-selling prospects at Sun may be clouded by whatever Oracle does with Sun, but STEC expects IBM and others to ramp up sales over the remainer of this year and next.

There's currently no effective competition for STEC's ZeusIOPS solid state drives. Seagate intends to announce an enterprise SSD product before the end of the year, but it will take six to nine months or more for it to be qualified by STEC-using vendors and by the Intel-using ones such as Pillar Data.

Start-ups Pliant and SandForce have enterprise SSDs or controllers coming, probably before the end of the year, but they'll have to jump through the same qualification hoops.

STEC has extended its range as well, with a third generation ZeusIOPS that features improved performance, a faster 6Gb/sec SAS interface, and a cheaper multi-level cell variant. STEC's Mach8 server flash is also going into near-competition with Fusion-IO, although the Mach8 doesn't have a PCIe interface as does Fusion's ioDrive.

When competition does arrive in the enterprise SSD market, and as STEC starts competing in the more price-sensitive server flash market, then its early golden days - its first-mover advantages - will come to a close. Prices will drop and it will have to replace lost margins with higher volumes.

The company probably has until mid-2010 at the earliest before that happens. Let Nehalem EP 4-core and EX 8-core processors revitalise the server market, and let the downturn end, and both factors could increase enterprise storage-array sales significantly, making STEC sales reps very happy people.

This great and uncontested run has to come to an end sometime, and other players will eventually emerge. Until then, STEC's prospects look terrific.

However, if its sales don't rise and rise, or if the Nehalem server-boost rocket doesn't lift off, or the downturn stays at bottom - or even worsens - then STEC's $2bn valuation will probably vanish and its rise may well be seen to have been a bubble fuelled by expectant sentiment but not justified by real value.

Are we looking at a STEC share-price bubble or growth based on real value? No one knows yet, of course. That's the wonder of life in the investment casino known as the stock market. (I don't have any STEC shares, by the way. I don't have any shares at all, in fact.) ®

The Power of One eBook: Top reasons to choose HP BladeSystem

More from The Register

next story
Apple fanbois SCREAM as update BRICKS their Macbook Airs
Ragegasm spills over as firmware upgrade kills machines
Attack of the clones: Oracle's latest Red Hat Linux lookalike arrives
Oracle's Linux boss says Larry's Linux isn't just for Oracle apps anymore
THUD! WD plonks down SIX TERABYTE 'consumer NAS' fatboy
Now that's a LOT of porn or pirated movies. Or, you know, other consumer stuff
EU's top data cops to meet Google, Microsoft et al over 'right to be forgotten'
Plan to hammer out 'coherent' guidelines. Good luck chaps!
US judge: YES, cops or feds so can slurp an ENTIRE Gmail account
Crooks don't have folders labelled 'drug records', opines NY beak
Manic malware Mayhem spreads through Linux, FreeBSD web servers
And how Google could cripple infection rate in a second
FLAPE – the next BIG THING in storage
Find cold data with flash, transmit it from tape
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Reducing security risks from open source software
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.