Feeds

SSD flag bearer to quickly hit $2bn valuation

Apex of STEC's bubble?

HP ProLiant Gen8: Integrated lifecycle automation

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.) ®

Reducing security risks from open source software

More from The Register

next story
Sysadmin Day 2014: Quick, there's still time to get the beers in
He walked over the broken glass, killed the thugs... and er... reconnected the cables*
SHOCK and AWS: The fall of Amazon's deflationary cloud
Just as Jeff Bezos did to books and CDs, Amazon's rivals are now doing to it
Amazon Reveals One Weird Trick: A Loss On Almost $20bn In Sales
Investors really hate it: Share price plunge as growth SLOWS in key AWS division
US judge: YES, cops or feds so can slurp an ENTIRE Gmail account
Crooks don't have folders labelled 'drug records', opines NY beak
Auntie remains MYSTIFIED by that weekend BBC iPlayer and website outage
Still doing 'forensics' on the caching layer – Beeb digi wonk
BlackBerry: Toss the server, mate... BES is in the CLOUD now
BlackBerry Enterprise Services takes aim at SMEs - but there's a catch
The triumph of VVOL: Everyone's jumping into bed with VMware
'Bandwagon'? Yes, we're on it and so what, say big dogs
Carbon tax repeal won't see data centre operators cut prices
Rackspace says electricity isn't a major cost, Equinix promises 'no levy'
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.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Seven Steps to Software Security
Seven practical steps you can begin to take today to secure your applications and prevent the damages a successful cyber-attack can cause.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.