I have been working in technology for a few decades now and have witnessed significant changes and shifts in the market. While working as an industry analyst it was my job to keep my finger on the pulse of market trends and predict where I believe things were headed. As I look at the most recent news about Micron exiting the storage class memory (SCM) business, it causes me to pause and think about the long-term implications for this segment of the market. Micron was not shy about sharing its reasons why it chose to leave this business by saying:
“Micron has now determined that there is insufficient market validation to justify the ongoing high levels of investments required to successfully commercialize 3D XPoint at scale, to address the evolving memory and storage needs of its customers.”
So, what does it mean when a company the size of Micron decides to exit a business segment? As you can imagine, I have a few thoughts on the subject, which is why I started writing this blog.
Back in 2015 Micron and Intel partnered to bring new technology to market that had better performance and endurance over traditional NAND flash. That technology is called 3D Xpoint, and while Intel came to market with its brand, Optane, Micron never really shipped its product under the brand QuantX to the broader market. In fact, Intel recently announced it was scaling back its distribution to the consumer market to focus on the enterprise business alone.
Personally, I do think the technology has a lot of great merits and potential, however, just like other great technologies we have seen in the past, having great merits and potential doesn’t help if there isn’t widespread adoption. I can think of a few technologies that have had great merit and potential but not enough widespread adoption, such as Banyan Vines, Blu-Ray, LaserDisc, and Betamax just to name a few.
Adoption v. Merit & Potential
Maybe you don’t remember the company, Banyan Systems, but they entered the network operating system business in 1984 to compete with the long-time incumbent, Novell. Banyan Vines was certainly superior in design over Novell, in my humble opinion, having been built on a BSD platform and it had directory services, StreetTalk, long before Novell had its NDS. Banyan just couldn’t get widespread adoption, so they folded.
Probably the other one that comes to mind when talking about merit and widespread adoption is Sony Betamax v. JVC VHS. Betamax may have been the better technology choice, but VHS achieved the widest adoption with over 40 companies manufacturing VHS equipment v. only12 for Betamax. And that is the inflection point one must consider and look at when new technologies hit the market, merit v. adoption. There are some companies that have gone the way of the “Betamax bandwagon” to create a storage solution that is 100% tied to a specific format of technology without having widespread adoption as of yet. That can be a scary place to be for some customers who depend on this storage to be at the heart of their ecosystem because we all know the law of supply and demand, and given Micron’s statement of their reason “why”, I think customers looking at new storage solutions should be wary of those vendors who have chosen to create a storage solution dependent on a particular technology platform.
Monsoon of 2011
Remember the massive flooding that occurred after the Thai monsoon of 2011? Hard drive prices went through the roof, products were delayed, and the enterprise customers suffered because the hard drive supply chain had broken down. If I am an enterprise customer looking at storage solutions tied solely to this technology, these are the questions I’m asking myself and my teams.
- What happens now if for some reason the supply chain for 3D Xpoint is hit by unforeseen circumstances?
- Where does this leave vendors who have created solutions dependent on that particular technology?
- Where does this leave us, the customer, who bought into this solution down the road?
- Who will be the manufacturer of the 3D Xpoint, will it be Intel or another company?
- With Micron gone, Intel is the only provider of this technology, which means no other competition, and no pricing pressure whatsoever.
- What if Intel decides to exit this particular segment in the same fashion as Micron?
In this day and age, you have to think about contributing factors to your risk. Storage solutions that are truly hardware-agnostic are the most risk-averse, in my opinion. You aren’t bound to one specific technology to keep your business running. Think about it. How successful would Microsoft be if their operating systems would only run on IBM PCs with a very specific chipset? My guess is not very successful. Some other companies would have come along and created a very portable operating system to compete with them and win because it wasn’t tied to one platform. This is why real software-defined solutions are gaining so much validation in the market today because you choose, you decide.
From my perspective as a long-time industry analyst, what I see some storage companies doing by tying themselves to a single technology platform is like the razor blade and razor concept. It may be a nicely integrated solution, but what if you find something better down the road?
You can’t use it because “the new razor blade” doesn’t fit on the “razor” you just acquired. It is too early to predict what the “long-term” will look like for this technology, but Chris Evans in his article mentioned above does share some of his perspectives which do provide some thought-provoking insights.
I do believe with Pat Gelsinger now at the helm of Intel, we will very soon see what his take is on this seismic shift by Micron. I think his time spent over at VMware, definitely taught him a thing or two about the importance of widespread adoption.
For customers looking at new storage solutions, there are always several things to consider and given the recent news about Micron exiting the SCM business, one has to think about “what is next?”
Chapa, signing off.
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David A. Chapa is a technical evangelist and strategist with over 30 years of industry executive and analyst experience helping organizations with data protection, recovery, and storage–and how to leverage cloud infrastructure, from hybrid to hybrid-multi-cloud. David is the head of competitive intelligence at Qumulo.