Honey, I Shrunk The Enterprise Disk

Disk technology for enterprise servers and storage subsystems is going though a fundamental, though gradual, change. I'm not referring to new thresholds in capacity, a shift from parallel to serial, spin speeds or faster I/Os per second. Rather, we are on the cusp of an overall transformation to a new form factor.

Although the 3.5-inch form factor remains prevalent, a new crop of 2.5-inch disks started to appear in the middle of last year, and more are expected out this quarter and throughout this year. That sets the stage for a whole, new generation of drives. But what about demand? Taking an inch off a drive might be a big deal for a notebook computer or, more obviously, an iPod, but servers and storage arrays? However, 2.5-inch drives hold great promise for systems where there are multiple disks, or where power and cooling are significant issues. Those drives also will support evolving standards, such as serial-attached SCSI (SAS).

Of the four top suppliers of enterprise drives, three--Seagate, Hitachi and Fujitsu--are pushing forward this year with plans to roll out 2.5-inch drives. Maxtor, the one holdout, believes the market for the new drives will be limited until 2006, so it has yet to get in the game.

To be sure, no one is predicting that subsystem manufacturers will displace larger drives with smaller ones out of the gate. Seagate, the first to start shipping its 2.5-inch Savvio disks, sees the initial uptick coming from direct-attached storage systems, primarily servers.

"The launch of Savvio into the marketplace will start this transition in a pretty significant way," says Brian Dexheimer, Seagate's executive vice president of sales and marketing. "It's going to be a pretty significant dynamic."

In fact, IBM recently said it intends to offer them in its blade servers. HP also has said it intends to offer 2.5-inch drives in its servers by next quarter, though it hasn't revealed whose. Power and I/O density are the key driving factors as to why smaller drives make sense, Dexheimer says, particularly with the heat and power emitted from the latest crop of processors. "We are now able to supply enterprise-class capacity and performance drives into power budgets that are getting increasingly squeezed by processors," he says.

Fujitsu and Hitachi also plan to roll out 2.5-inch drives. Joel Hagberg, Fujitsu's vice president of marketing and business development, predicts the market for 2.5-inch drives won't be limited to blades and rack-mounted servers. "I think initially in 2005, you'll see some storage systems that move to 2.5-inch because they are complementary to the server design," Hagberg says.

Brendan Collins, Maxtor's director of marketing, disagrees. At best, he says, 2.5-inch drives will encompass 10 percent of the enterprise disk market--primarily in blade systems. While he doesn't deny the smaller drives will allow power and density improvements, he says Maxtor has made a deliberate decision not to release such drives this year, arguing whether such a market can sustain the investment in manufacturing.

Based on bill-of-material costs, Collins estimates that 2.5-inch drives will command a 50-percent price premium, a surcharge he doesn't see OEMs or, more important, customers willing to pay. The delayed release of AMD's and Intel's next-generation chip architectures will further depress demand, he adds. "There isn't a huge market for 2.5-inch [drives]," he says.

Today, the challenge for any manufacturer in this space is how to get the most out of its R&D investment, Seagate's Dexheimer says. "Fortunately for us, we've been able to platform the manufacturing and technology to give us the broadest product line in this space, which we think will allow us to keep the leadership position we have," he says.