Solution Providers Struggling With Crippling SSD Shortage See Little Chance Of Relief In 2017

Solution providers and system builders are finding a growing shortage of SSDs starting to impact their enterprise and PC business.

Supply difficulties on the enterprise side of the SSD business, particularly of Intel-based SSDs, are pushing solution providers to delay shipments and look for alternative sources as customers increasingly turn away from traditional spinning hard drives.

On the PC side, the complete unavailability of certain models is also causing havoc for some solution providers looking to meet an ever-growing demand for SSDs.

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Marc Harrison, president of Silicon East, a Marlboro, N.J.-based Intel partner, said the shortage of Intel's popular SSD 540 client SSDs, including the 2.5-inch and M.2 models, has sent his hardware business spiraling down 20 percent this quarter.

"There's a huge worldwide shortage of SSD drives, and we haven't seen anything from Intel in months, and won't see anything until May," Harrison told CRN. "Whenever there's a shortage the last ones to get Intel's products is the channel."

The SSD shortfall stems from a combination of fast-growing demand for SSDs as the per-gigabyte price falls ever closer to that of slower-performing spinning hard disks and a transition by manufacturers of NAND memory, the key component in SSDs, toward 3D NAND technology.

These two factors are especially impacting Intel's enterprise SSD partners, who report shortages are slowing down shipments of servers and storage.

Intel has sent notifications to some of its partners warning them that the SSD and NAND industry is experiencing record demand that is larger than current capacity. In that notification, which CRN reviewed, Intel said it is investing in its SSD supply, and that supplies are expected to remain tight through 2017.

Intel also said in that message that it is prioritizing supply for the data center market.

Intel did not respond to a request for further information by publication time.

Prioritizing data center SSD supplies can't come too soon for solution providers.

Intel SDDs tend to be the most popular model for enterprise customers, said Jeff Olson, vice president at Northern Computer Technologies, or Nor-Tech, a Burnsville, Minn.-based custom server and storage system builder with a focus on the enterprise business.

"As soon as a shipment of Intel SSDs hits the U.S., they're sold immediately," Olson told CRN. "We are able to get some from Supermicro, which seems to have better availability than the distributors."

Nor-Tech has been forced in some cases to use Samsung or Micron SSDs, which is not that big a deal, Olson said. "It's not a big deal," he said. "So far, they are more available. I'm not sure how long that will last. But we have not been stymied for lack of SSDs."

Another custom system builder, who preferred to remain anonymous, said enterprise customers like the Intel SSD line because of the variety of products.

"Intel has two pages filled with different SSDs in their catalogs," the system builder told CRN. "Others have only a few models. Intel has the highest capacities, and is usually the first in terms of new models or capacities. So customers ask for Intel."

However, the system builder said, customers are using more Micron and Samsung SSDs because of the Intel shortage.

Andrew Kretzer, director of sales and marketing at Bold Data, a Fremont, Calif.-based custom system builder, told CRN via email that it is almost impossible to get Intel's enterprise SSDs in the channel, and that Intel's authorized distributors are worried they may have no supplies throughout much of 2017.

One solution provider that partners with a major server and storage OEM told CRN anonymously that his vendor has said to expect SSD and NAND backlogs for another quarter or two.

The delays are already impacting shipments to major customers, the solution provider said. "One of our government customers wants servers with SSDs, but has been delayed multiple times," the solution provider said. "We checked with a major competitor, and found the same. So we feel this is an industrywide challenge."

The solution provider said about 50 percent of new sales have shifted from hard drive-based storage to SSDs. "New technologies like deduplication and compression are helping drive demand," the solution provider said. "And hyper-converged infrastructure works better with all-flash architectures."

Gautam Shah, president of Colfax International, a Sunnyvale, Calif.-based solution provider, said his company is lucky in that it managed to secure enough supply to last through at least part of the shortage.

"You'd have to have been blind to not have heard of or seen the shortage," Shah told CRN. "There have been lots of reports. People who listened prepared themselves in advance. The lead time today can range from zero days to up to four weeks. You can't plan in advance for demand for all SKUs. So you plan for your bread-and-butter SKUs."

On the client side, Silicon East's Harrison said he is particularly wary of the SSD market's impact on his business as Intel's next-generation NUC (Next Unit of Computing) small form factor PC hits the market in April. Silicon East integrates Intel NUCs and resells them, but without access to SSDs, the company won't be able to bring the products to market, he said.

Harrison said that the Intel SSD 540s was also unavailable through other distributors, including Tech Data and Ingram Micro. Neither distributor was available to respond to CRN's request for comment by publication time.

A CDW sales representative told CRN that the company ships those SSDs as fast as they come in, but does not expect new shipments until late May or early June.

Kent Tibbils, vice president of marketing at ASI, a Fremont, Calif.-based Intel system builder, said that he's seen shortages across the board since October 2016, and has heard the shortages on both the client and data center sides will continue through the remainder of this year due to allocation and constraint issues.

"The collective news is, it's not good," Tibbils told CRN. "In terms of the shortage on SSDs, I’d say that yes, this is impacting channel partners. We are seeing shortages and higher prices on SSD and memory so both NAND and DRAM are impacted. In terms of SSDs, the shortage is the reason our sales are down for this category. The interest and demand for SSDs is still strong but supply is just not there right now due to the transition to 3D NAND."

Pricing is another issue that solution providers are facing with SSDs, Tibbils said. Vendors like Intel and Samsung are ending rebates on certain drives or capacities due to the shortage, adding another wrench in channel partners' SSD businesses, he said.

"We're forecasting as much as we can back to manufacturers and working with our customers to figure out how to work through this," he said. "It's not easy."