Even Google Can't Save the Flash Market

SanDisk, Micron(MU Quote - Cramer on MU - Stock Picks), Samsung and Intel have all recently released solid-state hard drives designed for notebook PCs, touting the small-size and shock-resistance of flash chips as key advantages compared with traditional hard drives that use rotating magnetic disks to store and retrieve data.

Yet even with the recent drop in flash-chip prices, solid-state drives are significantly more expensive than their hard disk counterparts, which has limited their appeal. Most analysts don't see flash memory becoming affordable as a primary storage drive for a mainstream notebook PC until at least 2009.

The situation is different in the market for servers, though.

"I think the bigger need could be on the back-end first, and then laptops," says Raj Sharma, an analyst at Polestar Investments.

"The more mission-critical and the more performance-critical applications are going to be picked up first, because price is not that much of a consideration there," he says.

Moreover, because flash drives are more power-efficient than traditional hard drives, they can help lower energy bills, an increasingly important consideration for companies like Google that operate large banks of servers.

According to a report Monday in Taiwanese computer publication DigiTimes that cited anonymous sources, Google is switching some of its servers to solid-state drives provided by Intel, along with the corresponding controller chips from Marvell(MRVL Quote - Cramer on MRVL - Stock Picks). Google, which is famous for building much of its technology infrastructure in-house, will take shipments of the flash drives late this quarter, according to the report.

Jim Handy, a memory analyst at Objective Analysis, says that flash memory drives provide the kind of speedy performance that's increasingly important for online services that focus on transaction processing, like credit card processing and up-to-the-second stock market information.

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