The pen drive is very handy for storing data. Many of us have several of them. A 250 GB flash drive costs as little as $20. However, the uprising of flash storage has a long history. The seed was planted in the 1960s with the development of floating-gate MOSFET, while the computer storage industry was dominated by the magnetic drum, core, tape, and hard disk. After 20 years, the seed started to germinate in the 1980s at one of Toshiba’s laboratories in Japan. Subsequently, it took the shape of the invention for offering a solid-state alternative to electrotechnical means of data storage. In an IEEE conference in 1984, inventor Dr. Fujio Masuoka presented an industry white paper about the new uses of floating-gate in Toshiba—solid-state Flash memory. Subsequent R&D led to the uprising of a creative wave of destruction, making flash memory a Disruptive Innovation.
Its invention immediately left the impression that a new era has begun to replace all kinds of magnetic, even optical, storage innovations like a floppy drive, CD Rom, and hard disk with solid-state memory. The opportunity to remove machinal moving parts and the scope of increasing storage density by adding one after thin layer triggered R & D investment to explore its potential. It rapidly kept growing as a substitute for conventional storage innovations. More importantly, industry leaders like IBM suffered a disruptive effect on a hard disk storage business. Over time, flash memory has grown as disruptive innovation by unfolding its might as creative wave destruction in the computer storage industry.
Evolution of computer memory
The computer data storage industry started gaining momentum in the 1930s. At that time, the technology core was perforated on board or paper. Around this technology core, IBM patented punch card and paper tape innovations as computer input and data storage innovations. With these two innovations, IBM had a virtual monopoly in computer storage for almost 30 years. Moreover, it was a highly profitable recurring flow revenue for IBM. The next technology core was a magnetic means of data storage. Around this technology core, storage innovations emerged in magnetic drums, core, and hard disks.
In all these three innovations of magnetic storage, IBM had a strong patent portfolio and also a virtual monopoly. Furthermore, the audiotape invented in the 1920s by Germans was adapted for data storage in the computer industry. During the 1960s, IBM also innovated the floppy disk for offering a portable option. The computer industry also witnessed the entry of optical storage devices like CD ROM.
But all these innovations needed moving parts. They were also prone to accumulating dust and fungus. Despite the exponential growth of data volume, the computer industry was handicapped with electricidal and optical storage technologies. On the one hand, there was a limitation in storage density due to a mechanical head’s need. Furthermore, there was a reliability issue, primarily caused by dust, fungus, and mechanical failures. In addition to it, the need for rotating the storage surface was placing limitations on the speed of access.
Rise of hard disk drive industry
In the computer storage industry, hard disk drive emerged as a dominant force. It started the journey in 1956 with the introduction of a prototype disk drive–IBM 350A. Subsequently, 3.75 megabytes IBM 350, rolled out as a commercial product. The long development pathway offered continued progression. Storage density kept progressing, reaching TDK’s demonstration of 2 TB on a single 3.5-inch plate. Along with it, access time and cost kept falling. For example, in the recent past, the price per GB of HDD fell by 45% from $0.11 to $0.05 per GB between 2009 and 2011.
Like many other innovations, the HDD industry witnessed very slow progress at the beginning. It took almost ten years for IBM to find three additional companies in the competition space. These companies are Anelex Corp., Bryant Computer Products, and Data Products Corp. At the ramp-up stage, the HDD industry saw rapid growth in the late 1960s and also in the 1980s, reaching a peak of 75 manufacturers in 1985. The volume kept growing, reaching 22 million units and $23 billion in revenue in 1989. Subsequently, the volume reached a peak in 2010 with a shipment of 651 million units. It’s interesting to observe that entering the industry after 20 years of IBM’s journey in 1977, Toshiba grew as a market leader. This Toshiba also gave birth to flash memory, which has pushed the HDD industry on the declining trend, eroding global unit shipments of hard disk drives (HDDs) to 316.3 million units in 2019.
Invention and uprising of flash memory as a creative wave of destruction
In the early 1980s, Toshiba assigned Dr. Fujio Masuoka to advance DRAM technology. Due to his curiosity, he also assigned some resources to explore solid-state storage technology, which led to the invention of NAND memory technology. However, the name “flash” was suggested the erasure process of the memory contents resembled the flash of a camera. Despite its hidden potential, his boss was not happy as he did obey instructions. Subsequently, it led to the departure of Dr. Fujio Masuoka from Toshiba. However, later on, Toshiba pursued the commercial interest of this invention, perhaps reluctantly. During the same time, SanDisk co-founder Eli Harari developed the Floating Gate EEPROM. Subsequently, this technology proved the practicality, reliability, and endurance means of semiconductor-based data storage.
Due to its unique feature, flash storage technology did not take much time to show its might. Within less than 10 years of invention, as early as in the 1990s, the flash memory industry rapidly expanded at an unprecedented rate. On the 7th birthday, flash memory revenue in 1991 reached $170 million, followed by $295 million in 1992, $505 million in 1993, $864 million in 1994, and $1.8 billion in 1995. Within the next decade, in 2006, the revenue of flash memory was over $20 billion.
Within less than 20 years, the market share of flash memory in the computer storage market exponentially grew from 0.3% in 1990 to 34% in 2006. One of the reasons for the rapid growth flash memory market is the uprising of the smartphone. It is estimated that in 2017, the average smartphone contained 43 GB of NAND flash storage. Experts suggest that it will grow substantially over the years, reaching 142 GB of NAND flash storage.
The rapid growth of flash disrupted optical and magnetic storage makers
Over the last ten years, the HDD market has been shrinking. On the other hand, floppy diskettes and CR-ROMs have been removed from the market by the creative wave of destruction of flash memory. Flash memory in the form of a solid-state disk has been taking over the HDD market in laptop and desktop computers. The enterprise segment of the storage industry is also being taken over by terabyte-sized flash storage. As opposed to IBM, the $60 billion market of flash memory in 2020 is dominated by Intel, Micron Technology, Samsung Electronics, SanDisk, SK Hynix, and Toshiba.
The mighty power of flash memory started to unfold, having different names like USB flash drive, DiskOnKey, Pen drive, or thumb drive. Within 10 years, its wave of Creative Destruction flushed away floppy and CD-ROM makers. The next wave of growth in the form of SSD (solid-state disk drive) has been wiping out HDD from laptop and desktop computers. However, the uprising of smartphones gave it a unique market to grow and gain the strength to cause destruction. Mainly, disk drives were not suitable for mobile devices like smartphones. In the terminology of Professor Clayton Christensen, this market segment appears to be non-consumption for HDD. However, Apple initially used a very small-sized HDD in iPod. But later on, they replaced it with flash memory.
Magnetic technology-based storage makers suffered from the disruptive effect
After taking over the portable and PC market, it has been gaining momentum troughs additional advancements, including 3D. Its creative wave of destruction is about to unfold in the enterprise segment. As flash memory has a completely different technology core, IBM and other magnetic storage makers failed to have smooth switching. Subsequently, many of them, including IBM, experienced the disruptive effect of the flash, which left only 6 in 2009 and 3 in 2013. However, the exception is Toshiba. In fact, being a dominant HDD maker, Toshiba also invented flash storage in 1984. On the other hand, once HDD maker Western digital is around as it acquired SanDisk.
NAND flash and her cousins are Disruptive technologies. The uprising of flash memory as disruptive innovation indeed. Both Schumpeter’s creative destruction and Christensen’s disruptive innovation unfolded together. However, Toshiba is an exception. While keep generating revenue from HDD, Toshiba was fueling the creative destruction of flash memory. Subsequently, Toshiba escaped from the disruptive effect of flash memory’s creative wave of destruction. By the way, Toshiba’s stake in flash memory could have been far higher if it had not made the wrong decisions. In retrospect, the unfolding dynamics of flash memory as disruptive innovation offer valuable lessons for managing innovation in the competitive market.
