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Dell: Flash notebooks are working fine

The return rates on flash notebooks are far lower than what a Wall Street research firm claimed, Dell says. And the firm agrees.

Dell has crunched its numbers and says there isn't a problem with solid-state drives.

The Round Rock, Texas-based company says that the reliability rates for those notebooks are equal to or better than for notebooks with hard drives and that the return rates are "an order of magnitude lower" than reported in a recent analyst report from Avian Securities. (See more on Dell's full statement here.) We wrote a story on Avian's report.

Dell Latitude
A Dell Latitude with a flash drive. Michael Kanellos/CNET Networks

Avian earlier this week said the return rates for notebooks with solid-state drives has been around 20 percent to 30 percent. A Dell spokeswoman says that's just not so: the return rate actually is around 3 percent. Dell typically doesn't talk publicly about return rates with this kind of specificity (and at the time of the original article, Dell had said it doesn't generally comment on the issue), but the report and the coverage that surrounded it prompted the company to put some more light on the issue.

So in short, Dell says, solid-state drives are doing as expected for a new technology. Score a big one for a manufacturer over Wall Street.

So how did Avian get the number wrong? Managing Partner Avi Cohen said that Avian might have been getting early data on returns, and not the complete data on sales. He says he can't and won't challenge Dell's data. He even saluted Dell for being an early leader in this category.

Despite the discrepancies between Avian's report and Dell's numbers, Cohen added that there is another issue: customer satisfaction. Although the return rate is a lot lower than he expected, Cohen claimed that there is a sense that customers are somewhat disappointed with the performance gains, considering the high price of notebooks with these drives. Putting a 64GB flash drive in a notebook adds $874 to the price. (But, hey, earlier in the week it was $899.)

"Anecdotally, the returns have been high and the expectations have been low," Cohen said.

Performance, or at least lower-than-expected performance, is an issue that the flash industry will likely have to contend with. The first generation of flash drives could not run particular applications--specifically Microsoft Outlook--as well as notebooks with regular drives, Dell admitted. The probem was ameliorated in February, the company said, when a new generation of flash drives with a better interface went on sale.

But what do you get for $874? Boot-up time is a bit quicker, and some applications come up quicker, but the differences can be measured in seconds. I tested one and liked the quicker boot-up, but not for that much money. The best thing about the drive was that the computer made less noise. Jim Handy, an analyst at Objective Analysis, has said he's heard anecdotally that buyers or testers were a little underwhelmed. Again, it's unscientific, and this isn't meant to detract from Dell's data, but that perception is out there.

Don't forget, the first customers for flash drives were the military and they bought them because they have to put notebooks in harsh, unpredictable environments. (MSystems out of Israel was an early leader in the field.) Most corporate users never experience that benefit.

Cohen also said that it will also take time for manufacturers to come out the cheaper flash drives with flash that holds multiple bits per cell.

The flash industry, of course, would like to see flash notebooks take off because they are suffering through severe price declines. "The semiconductor business has seen a significant decrease in operating income due to a larger than anticipated declines in sales prices of NAND flash memories," Toshiba said Wednesday in revising its current sales projections downward.

Like a lot of people, Cohen says flash-based notebooks will be big, but not just yet. The price has to come down and the technical glitches have to be ironed out.