Investing in New Data Storage Technology

For the last decade in technology, you couldn’t turn around without being hit in the face with something utilizing 3D in some way: movie theaters, televisions, video game interfaces, audio codecs, and, of course, printing.

At the same time, the very architecture of computing has been undergoing a transition to 3D, too. It’s not as flashy as a 3D printer or fully immersive 3D video game, but it’s no less amazing to behold.

Believe it or not, for most of computing history, the electrical current flowing through circuit boards and turning zeroes into ones has moved on a flat plane. Computer memory and storage has been a process drafted and carried out on an X/Y plane.

But for the last decade, it’s been building up a Z-axis with 3D transistors and magnetic storage.

This week, memory company Seagate Technology (NASDAQ: STX) debuted a new hard drive that uses traditional 2D storage methods but attacks it with a three-dimensional concept.

It has a huge capacity and cheap price tag, and it is worth considering if you are investing anywhere in the memory space.

“I’m Your Density…”

You often hear the term “storage density” when talking about hard drives. That’s because the amount of storage space is determined by how many magnetic charges you can fit on a patch of a metal plate. The more you can fit, the higher the storage density.

Since hard disks were first invented more than 50 years ago, storage density has increased exponentially. But the thing is, there’s only so much density you can get before the hard disk starts to become volatile.

In the simplest terms, if you have too much energy in a hard disk, it runs the risk of demagnetizing itself.

New storage densities are created by changing the layout of charges on the disk. The standard arrangement is longitudinally, where disk sectors are arranged like grooves on a record.

Since the early 2000s, however, nearly every hard drive manufacturer (Toshiba, Hitachi, Western Digital, Fujitsu, and Seagate) has built drives with a perpendicular style of memory, where the charges are vertically oriented on the platter.

This effectively raised the potential storage on hard disks from 200 gigabits per square inch longitudinally to nearly 1,000 gigabits (or one terabit) per square inch perpendicularly.

In Seagate’s latest drive, it’s trying a new arrangement it calls shingled magnetic recording (SMR).

“Shingled”

Seagate’s new SMR drive has a capacity of 8 terabytes and costs just $260.

Now, before we go any further, know that this is ridiculously cheap.

Go to any shopping website and type in “8TB hard drive,” and you’ll see what I’m talking about here. The cheapest, slowest models available right now at that capacity are between $600-$800, and the better performers run upwards of $1,500.

The reason this one is so cheap is that Seagate did not build this hard drive to be used for everyday operations. It’s more for archive and backup purposes, so the drives spin slower, and the read/write throughput is much slower as well.

The overall slower performance is related to this SMR architecture.

This “shingled” architecture lays disk tracks (concentric circles of bits) right next to each other, and when new tracks of data are added, the spaces between the tracks are trimmed with the disk writer. The tracks effectively overlap each other like the shingles on the roof of a house — hence the name.

It isn’t actually 3D, but the idea that the disk reader is smaller than the disk writer allows data to be manipulated in a way that creates “overlaps.” It is 3D thinking applied to a 2D problem.

It increases perpendicular storage capacity by a third this time around. In other words, where other hard drive platters can hold 1 terabyte, these can hold 1.33 terabytes.

This means Seagate can hit the 8TB mark using fewer platters than other hard drives, and that means a low cost to the consumer.

Of course, the tradeoff is that they perform more slowly than almost every other drive of comparable capacity, and this is why they’re being marketed as drives for archival purposes.

But Why?

This technology has been on our radar for a little more than a year, and this is the first consumer SMR drive to hit the market. It drives down the cost of memory to just $0.0325 per gigabyte.

Source: jcmit.com

For years, we’ve been getting more storage for less money. The cost of memory dictates how systems are designed, which subsequently dictates how systems are used.

The effect is a chain reaction, and the first link of the chain is often a patent that is licensed out to industry competitors.

So who owns critical patents for SMR?

There are a few companies…

One of them is Hitachi Global Storage Technologies, which was granted three important patents for SMR in 2013 and 2014. The thing is, HGST isn’t a standalone company anymore; it was acquired in 2012 by none other than Western Digital (NASDAQ: WDC).

If Seagate isn’t a name you’d want to get behind, maybe WD is.

Good Investing,

Tim Conneally

 @TimConneally on Twitter

For the last seven years, Tim Conneally has covered the world of mobile and wireless technology, enterprise software, network hardware, and next generation consumer technology. Tim has previously written for long-running software news outlet Betanews and for financial media powerhouse Forbes.