Analyst: Returns, technical problems high with flash-based notebooks

Almost one-third of flash-based notebooks being shipped are being returned, says Avi Cohen of Avian Securities. Dell agrees there are problems.

Editors' note, March 19, 2008 10:34 AM PDT: Dell has rebutted the claim about return rates, and Avian Securities says it won't challenge Dell's numbers. See " Dell: Flash notebooks are working fine " for more details.

Notebooks with flash-based hard drives cost a lot and, according to managing partner Avi Cohen at Avian Securities, they don't work very well either.

A large computer manufacturer is getting around 20 percent to 30 percent of the flash-based notebooks it is shipping sent back because of failure rates and performance that simply isn't meeting customer expectations, the firm stated in a report on Monday. Avian gathered this information on a recent swing through Asia.

Approximately 10 percent to 20 percent of the flash notebooks shipping from the large manufacturer are coming back because of technical failure, Cohen said, far higher than the 1 percent to 2 percent of notebooks that come back because of technical failure with hard drives.

Dell Latitude
A Dell Latitude with a flash drive. Is it worth the $900 premium? Michael Kanellos/CNET News.com

"There is an order of magnitude higher in failure rates," he said. (Avian is a research firm that does not have a financial interest in flash companies, Cohen said.)

The rest are coming back because of lackluster performance. Flash-based notebooks can't match notebooks with regular hard drives in terms of applications like video streaming, he said. These notebooks also cost a lot. Inserting a flash-based drive into a notebook adds about $900 to the price or more.

Cohen prefers to say a large computer manufacturer is having these problems. From my own research, I can tell you that Dell is so far the manufacturer that has promoted flash drives in notebooks the most. Dell gets its flash drives from Samsung. Apple just starting shipping flash-based notebooks.

A Dell representative declined to comment on failure rates or returns. However, Dell is admitting that current flash-based drives can exhibit worse performance on some applications where data is exchanged in small packed sizes, and one of those applications is Microsoft Outlook. "An SSD (solid state drive) can be slower than a traditional hard drive" on Outlook, the representative said. But flash drives are superior for random access, the representative added, than regular drives.

To that end, Samsung is coming out with a new type of drive that corrects that issue, the Dell representative said. (Calls are out to Samsung, but no reply yet.)

While the returns are bad news for notebook makers right now, the problems also dim the outlook for the flash industry in general. Flash manufacturers are looking for applications that will suck up the large volume of chips coming out of factories right now. The industry went on a building spree in the last few years. Many hoped that notebooks would accomplish this. Notebook makers currently are inserting flash that can accommodate a single bit per memory cell. Both notebook makers and flash makers want the industry to shift to cheaper flash that can hold two or more bits per cell so the prices of these notebooks can be closer to conventional notebooks.

Multi-bit flash, however, isn't as reliable, so if the industry is having problems with single-cell flash, it's going to be tough to shift to the cheaper type of memory, Cohen said. As a result, the oversupply in flash will linger and prices will continue on their rapid downward descent.

Flash sells for around $3 a GB, about a 50 percent decline from the last quarter of last year, according to Jim Handy of Objective Analysis.

"SLC (single level cell, the name for single cell flash) is just a proof of concept," Avian's Cohen said. Will these problems be solved? Yes, but it will take time, he said. A shift to multi-level cell may not begin until the end of the year. Some flash makers had hoped it might start occurring now.

I can actually back up some of Cohen's comments on application performance . I tried a flash notebook recently. While the silence was great -- the notebook makes no sound -- it was tough to see a marked difference in performance. Or at least one that was worth $900.

 

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