Status Update

Jul 18, 2013

Slides

Good day. My name is Sean, and I will be your conference facilitator today. At this time, I would like to welcome everyone to Micron Technology's SS Market Update Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer period Thank you. It is now my pleasure to turn the floor over to your host, Micron Investor Relations Director, Ivan Donnellton. Sir, you may begin. Thank you, and welcome to the Micron Technology SSD Market Update. On the call today is Glenn Hawk, VP of Micron's NAND Solutions Group, Ed Dollar, VP and Chief Memory Systems Architect, and Alan Holmes, VP of NAND Solutions Group Marketing. This conference call, including audio and slides, is also available on Micron's website at micron.com. Our call will be approximately 60 minutes in length There will be an audio replay accessed by dialing 4045373406 with a 23, 2013, at 5:30 pm, Mountain Time. A webcast replay will be available on the company's website until August of 2014. We encourage you to monitor our website at micron.com throughout the quarter for the most current information on the company, including information on the various financial conferences that we will be attending. Please note the following Safe Harbor statement. During the course of this meeting, we may make projections or other forward looking statements regarding future events or the future financial performance of the company and the industry. We wish to caution you that such statements are predictions and that actual events or results may differ materially. We refer you to the documents files on a consolidated basis from time to time with the Securities And Exchange Commission, specifically the company's most recent Form 10 K and Form 10 q. These documents contain and identify important factors that could cause the actual results for the company on a consolidated basis to differ materially from those contained in our projections or forward looking statements. These certain factors can be found in the Investor Relations section of Micron's website. Although we believe that the expectations reflected in the forward looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We are under no duty to update any of the forward looking statements after the date of the presentation to conform these statements to actual results. And I'll now turn the call over to Glen Hawk. Hello, everybody. Again, my name is Glenn Hawk, and, I'd like to start off with a brief introduction before turning it over to Ed and Alan. So to to start off here, you know, I'd like to put things in a little bit of perspective. There are a lot of reasons to be excited about the memory industry right now. Some of you may be excited about the supply demand tightness that's in the market right now. Others may be excited about the consolidation that's occurring much of it in favor of those who actually make memories or make NAND in particular. And then others may be excited about the, plethora of new startups that are out there that are applying flash components and flash SSDs in ways that, previously were not really envisioned. Those reasons excite us too, but at our core, we're a technology company. And, one thing or one overall trend that really excites us is that the memory technology innovations that we're driving here at on are enabling innovations around the world that change the way people live, change the way they work. And these changes in the way people behave and act are creating new devices, new demand for devices that in return drives a larger thirst for more memory. And that encourages us to push harder and invest more deeply for some of those innovations. And it's a very nice upward spiral that we find ourselves in. A lot of the data and information that we're going to talk about, throughout the rest of this afternoon is going to be a little bit more about the hearing now, but please keep in mind that we firmly believe here at Micron that memory is changing the world and we really think the best is yet to come. If you think back over the last few years, maybe maybe 30 years ago, people and analysts probably wouldn't have projected the number of gigabytes required support the transformation of digital audio and video. And if you go back maybe 20 years, probably, we weren't very good about predicting the amount of this, that would be consumed by mobile platforms smartphones in particular. And if you go back just 10 years, I'm not sure that we were really that great at predicting how much memory would be and how much solid state memory in particular would be consumed by cloud computing. Those are all trends that have happened. We're well aware of. We'll talk about through the day, but, I'll assert that there's another wave yet to come that few of us can imagine. And we won't talk a lot about that today. If we do talk about the current outlook on the next slide, what we see is we firmly believe that there is continued strong growth for NAND. What we're showing here is, the 2013 to 2017 projection, as you can see from our source here, we're using Gartner many of the analysts have similar projections. We're all seeing very strong consistent growth over the next few years. And starting from the bottom up, we have some of the traditional NAND segments that really fueled some of those early innovations that I mentioned earlier, removable storage, industrial, medical, automotive applications are still an important part of the market in our business. We see tablets here, a relatively new entrant. We see mobile. And what we're going to talk about the rest for the rest of the presentation here is the real breakaway segment, which is SSDs. We've been focusing quite heavily on this recently. And would like to give you an update on that. To pick that apart a little bit and look at what's think in within that solid state drive segment, there's really 2, at a high level, there's 2 components of it that are important. They're similar. But they're similar and they're important for different reasons. What we're showing here is the difference between enterprise solid state drives and client solid state drives And we're showing both the gigabytes that are projected to go into those segments as well as the dollars. And by comparing the 2, you get, some feel for, the differences, on the left and by looking at the gigabytes, you can see that the capacity or the gigabytes growth is really driven by, by client SSDs. And that makes a lot of sense. There are certainly a lot more client SSD devices in the world than there are, servers and storage array networks, etcetera. And you can see by a wide margin, the vast majority of the capacity is required to fuel that client growth. And that's very interesting to us because at Micron scale is important And we know that it's important to participate in that client segment. And so we certainly have a focus there. If you look at the right, And you look at, the partition of dollars or revenue between enterprise and client, you see a very different picture you can see that it's relatively equally balanced between enterprise and client. And of course, what that means is, is that there's more value there in the enterprise segment. It's much more difficult to serve. There are a lot of core competencies and capabilities. They, a, an enterprise requires And, what attracts us there, of course, is that higher value, those higher margins and the more stable margins. And they're, rather countercyclical to client SSDs and a lot of the other segments, that we serve with our NAND businesses here at Micron. As a result, that's why we have been on a multiyear campaign here to move up the value chain from silicon to systems. We built upon our silicon technology leadership and our NAND product leadership. And we, over the last few years, have been investing very heavily in some of the key elements to be a leader in solid state drives. That includes internal and external controllers. It includes a focus on both client and enterprise because we see them as being very complementary to one another in important parts of our business And we do have our eye on the next level of, integration above that, which is integrated software and hardware appliances. And before I turn it over to Ed here, I would like to make one note that, even though our focus is on climbing that value chain. By no means have we lost our tenacious focus on our Silicon Technology Leadership, earlier in the week, We did announce that we are sampling our 16 nanometer NAND technology, an image of our 128 gigabit MLC device is shown here on this slide, some interesting aspects of that are we can get nearly 6 terabytes of storage on a single wafer. And, we do plan to introduce some of our solid state drives using this drive. So at this point, I'll turn it over to our vice president and chief memory systems, architect, dollar. Okay. Thanks, Glenn. I think as Glenn stated, both NAND Technology and capacity are the foundation of SSDs, and having both is enabling us to develop a complete market leading storage portfolio. We spent the last couple of years focusing on building a complete product portfolio, and by complete, I'm referring to interface complete, form factor complete, and, of course, market segment complete. And what you're seeing here, is really the result of our focus. Products and their relevance to the market. Starting at the top, we have a P320, which is the highest performing PCIe drive in the industry, with bandwidth that saturates the interface has sub-fifty microseconds latency and well above 2 gigabyte per second sequential write bandwidth. When you achieve that level of performance in an SSD, it frankly opens up a world of new uses and we're starting to capitalize on those new uses with offering drives to take advantage of them. We still have new customers that frankly can't believe the level of performance that these drives actually deliver. Having PCIe SSDs in a 2.5 inch form factor is actually changing the way PCIe storage is thought and of course utilized. Next is our P-four twenty. Try builds on the success that we've had on the P-three twenty and adds capacity and cost improvement over the 320 by trading off performance in fills per day. For those applications that don't need the high performance in high fills per day, the 420 is a great solution for that market. Next, you move down to our enterprise class SaaS and SaaS drives, We launched these drives several quarters ago and continue to receive incredible market acceptance of these products. Next are our product designed for segments that require less fills per day than classic Leonard fries, but still demand higher liability and high performance. P400E and the 550 are doing a great job covering this segment. Last but certainly not least is the M500 which utilizes our 20 nanometer industry leading NAND and was the first one terabyte SSD in the industry. I can tell you keeping up with the market demand for this drive has been If you compare the product portfolio to others in the industry, you can see And let me take a moment to point out the column to me that is by far the most important on here, and that's the NAM column. I think because NAND makes up the majority of the bill of materials, we fundamentally believe that it's the necessity to success in this market. I'll go as far as to say that there is and will continue to be an inexorable move of market segment share to those with it and to those that have product breath portfolio breadth to utilize it. We have both. Before I turn it over to Alan to talk more about the details of our current business, I think it's important to recognize that customers Both storage and compute see Micron as a company that they want to do business with. It's the combination of having solid foundation that's So, with a few minutes kind of talking through how our business is really shaping up for SSPs. And in particular, I'll start off with the client piece. So if you can move to the next slide, please. So Ivan, it's interesting to note that it took us about 4 years to really ship the first 1,000,000 units for Micron. And now today, we're actually shipping about 1,000,000 a quarter And so I think that's, that's, again, a testament to what Ed was saying in terms of having our broad portfolio and really building out our business. If you look at, kind of how our customers are really starting to adopt the technology, we think there was an interesting trend that happened kind of last year. And if you look at around the Q1 'twelve timeframe, the pricing and the market that Glenn was describing was very advantageous for customers to start to really adopt SSD technology And in particular, we really saw growth in our business, as you can see, from the graph. And in particular, we're growing 2x faster than the market. And I think that's something that we believe is, as Ed mentioned, having access to the technology, having access to NAND capacity is certainly in our favor. One thing I will note is, in many of the SSD suppliers, the average Dental being shipped into the industry is really around about 128, 129 gigabytes. And for us, we're shipping somewhere around just south of, 200 gigabytes. I think that's an interesting trend for us because as we're driving Again, higher density SSDs into the marketplace, we're finding ourselves into some very unique market segments and opportunities. And we'll continue to grow on that, over time. If we move to the next slide, let's talk a little bit about enterprise. And we're really excited about the trends here. And specifically looking at, as Ed pointed out, as we've grown out our portfolio, the number of market opportunities and the number of customers we engage is growing every day. And so as we look out kind of over the horizon from year on year growth from Q2 'twelve to Q2 'thirteen, we're really kind of trending around 120 percent growth over that horizon. And, again, as we, as we kind of build out our portfolio and we engage with enterprise customers, knowing that the call time is a bit longer than our traditional enterprise or excuse me, our client business, it gives us the opportunity to see future growth. One thing I'll note here is, the density that we've seen in enterprises could have been low, what you'd expect, average has been around 2 100 gigabytes. And today, we're just slightly ahead around just around 220 gigabytes. We continue to see demand and opportunities for in excess of a terabyte. And we'll continue to look for opportunities to service that. If we move to the next slide, I really just want to talk about kind of our SSD growth. And right now, it represents about 25% of our revenue overall NAND revenue. And we continue to see this, a benefit from Micron, of course, adding more value. And as Glenn mentioned, moving up that value chain, we believe that's a competitive advantage for Micron. As we look at how we're leveraging our portfolio, how we're engaging with new opportunities, with new customers, we really view this as something that we'll continue to take a look at. The next slide, I really want to talk about how we're engaging with storage in general. And I think it's interesting to look at how we're servicing that market. About 50% of our NAND is going into the storage markets. And I think this is a focus area for us. And we continue to look for ways to increase our footprint with Micron Technology into the SSD marketplace. Okay. So if we look at, I mean, next slide, please. From a summary perspective, as Glenn pointed out, there's big opportunity We're certainly laser focused on taking advantage of that opportunity. As stated, we have a very broad portfolio and we intend to tune to develop and invest in maintaining this portfolio. We are growing faster than the market. We intend to continue to leverage our, our NAND and our, the technology that we're developing. We're looking at, again, half of our businesses going into the storage industry. And we continue to expect that to grow. And we know, as Ed pointed out, we're just seeing a number of customer OEM opportunities to align with Micron and get access to our, our technology and our NAND capacity. And so with that, I'll turn it over to Ivan for Q and A. We'll now take questions from callers. Just a reminder, if you are using a speaker phone, please pick up the handset when asking a question so that we can hear you clearly. Our first question comes from Stephen Chin of UBS. Please go ahead with your question. Hi, thanks for taking my question. Can you hear me okay? Yes, we can hear you. Great. Yeah. Ivan, I was wondering, in terms of the percentage of your NAND supply that you're willing to allocate towards solid state drive products. Is there a natural, ceiling or a limit that you guys would target or or U. S? Is that something that's still, that you will take as it comes? And secondly, in terms of the the competitive landscape today, just given the tightness in the supply, are you seeing the market being more competitive just been that the companies with captive supply are gaining share now or is it less competitive because you have fewer players, smaller companies that that can't compete because they don't have the captive NAND supply. Hey, this is Glenn. I'll take the first part of that question. And then Alan, I think, can dovetail into some of the, the latter parts your question dealing with some of the current competitive, phenomena that we're seeing. I think your first question was and the one I'll address, which was, do we have a ceiling, so to speak, on the amount of our capacity that we're willing to allocate toward SSDs? And let me add a little of our perspective to that is that even though SSDs is one word, so to speak, we certainly don't see it as one segment. So the prize and client, but each of those can further be subdivided into tremendous complexity. And we think that those subsegments, so to speak, are, again, can be somewhat countercyclical of one another. On the enterprise side, at a high level, their server side flash and their storage side flash, And within what we call client, there's not just clients for corporate clients, things that large corporations buy to make their employees more productive. But there's consumer clients, typically more price sensitive devices might not have the same security concerns as the corporate clients, the consumers and the corporations oftentimes find themselves, in different cycles. The refresh rate among corporations is often very different than say the holiday season purchasing cycle for client And we can subdivide that even further. We're seeing a lot of exciting opportunities for solid state drives in other segments like in automotive, for example, one could argue that the feature automobiles are nothing more than tablet that you can write in, in the future, the amount of Flash and the use of SSDs is a very exciting opportunity there. And there are a number of other devices as well. So I don't my answer is we don't we certainly don't have a an artificial ceiling just because of, the end product that we're selling our NAND into. We look to more carefully at the end segments, the end customers and make sure that we're comfortable with that diversification. So we're not hitting any limits by any means at this point in time. With that, I'll go ahead and turn it over to Alan Yes, I think from a competitive tightness or the impact that's having on the landscape, clearly, I think others in the industry have have signaled that they've seen limited NAND supply. I think that's clearly one of the advantages of having access to the capacity and really modulating it for the market opportunities that we see. I think that we're certainly got a little bit of tailwind in terms of market opportunities that we're were being exposed to. And I think the growth and some of the examples that Glenn pointed out are creating some some tightness. But again, I think being able to navigate that through that and modulate our capacity is certainly a competitive advantage for us. As it relates to where we want to put our SSDs in terms of customers and segments. Okay, great. Just one last one, if I could. Gretin, just given your comments about how you guys are approaching evidence more from a increase from an appliance or a complete solution standpoint, how should we think about the the margin profiles for these enterprise head products and and are there any specific companies that you're that you're benchmarking your up against as you create these solutions and I think about pricing or margins for the products. Thanks. Yes. Stephen, we certainly think about that quite a bit. It has been new frontier for a lot of what we've historically done here at Micron. Of course, when we look at solid state drives, we see the value add, from just simply creating a system level product in the first place. And then of course, we see the value add with a lot of the other product aspects that really make that piece of hardware, so to speak, a total solution. It can be the software that accompanies it sometimes in the form of tools, drivers, etcetera, manageability type software, the services and the other support that we provide are very important to certain customers, the ability to walk into a customer and hold their hand and really help them design that product into their application and optimize it, we're tapping into all sorts of value there that historically we haven't. So when it comes to benchmarking ourselves, we really have to benchmark, others who are doing bits and pieces of all of the above. There's relatively few of us that can participate in all of that from the NAND silicon all the way up through the service, the software, the support and all of those sorts of things. But there are a lot of individual companies that are doing very well with certain aspects of that. So we do try to take a look at all of it I think with the chart that I've shown previously that clearly shows the dollars per gigabyte for enterprise being so dramatically higher client. I think the first order that gives you a feel for the incredible difference that we're seeing just between those two segments. And again, enterprise does certainly rely on some of those other value added features more so than client. So anyway, that's the benchmarking is certainly going on, but it's quite a process to look at an array of fellow travelers here and see how we're doing. And we're pretty comfortable with our progress so far. Our next question comes from Doug Freeman of RBC Capital Markets. Please go ahead with your question. Great. Thanks for taking my question guys. We hear a lot in the market right now about some of your competitors entering the SSD space with 3 per cell solutions. Can you tell us how those are stacking up and whether you're going to need to offer a like product? This is Ed. Let me take that question. So this is something that we continue to look at. I think with our, our majority of our focus right now on the enterprise market, I think 3 big per cell in the enterprise probably something given the requirements of the enterprise from a performance and a reliability standpoint, that, is certainly something that we don't see, at least in the segments that we're focusing on in the enterprise. On the client side, I think it's important to, to, to make sure that when we compare TLC costs the SSD level versus a non TLC or an MLC, that you really understand, that, that, our 20 nanometer MLC is extremely cost competitive against the TLC. So what we've been doing is, is certainly using our 20 nanometer, 500 M drives to, to compete quite nicely against the TLC drive. So from a cost standpoint, we think we've got a cost competitive solution. And clearly from a performance standpoint, having an MLC solution, gives you the performance differential over TLC. With that said, I do fundamentally believe going forward, that there's going to start to be these, these cold storage type of applications where previously, most of us that have been in the, the memory business for, for quite a while, you know, never thought we'd see the day where we have cold storage that are being serviced by hard disk drives previously, looking at a extremely cost effective solution from a total cost of ownership standpoint that we fundamentally believe down the road is going to open up a just enormous opportunity for NAND. And so Glenn's comment, during his introduction about there's things that we never thought were were gonna happen. We're waving through some of them right now for sure, and I'll tell you the this, this concept of data centers going now that I've got a taste of NAND, and I really understand the value proposition and the fundamental total cost of ownership firsthand, I'm looking at every hard drive I've got and looking to replace them with solid state technology. And so perhaps there's opportunity for TLC or just MLC on a, yeah, more cost effective technology node to go after that. You know, I'm not sure we have enough capacity in the industry collectively to, to really put an enormous dent in it, but, it's going to start hurting. There's no doubt about it. I guess as my follow-up to that, you're talking about pushing into the cold storage space. Does that require 3 d NAND? And where are you guys at? We your 3 d NAND roadmap? Yes. So I would first start, by saying, I don't think it requires 3 d NAND. I think having 3 d NAND when and, if 3 d NAND is a lower cost solution, then the technology we're shipping today will, will certainly dictate that. So I, I wouldn't, I wouldn't, I wouldn't sit here and say that the only way NAND Technology is going to make it into cold storage is by 3 d. I think it's a total cost of ownership and a and certainly a cost, solution from a NAND and an SSD standpoint. In terms of our 3 d technology, obviously, everyone in the industry that, that wants to be and maintain leadership in the industry is investing in future emerging memory technologies as well as 3 d NAND technology. Right now, we're not in a position to, to talk about what our progress to date has been. I think it's something that, you'll hear more about in future opportunities. Great. Thank you. Our next question comes from Monica Garg with Pacific Crest Securities. Please go ahead with your question. Hi. Thanks for taking my question. Can you maybe talk about, like, you know, when I go and meet, like, enterprise or web 2.0 customers, I always feel that they always talk about this insatiable capacity demand for the in the enterprise segment. So I was kind of surprised when you talked about your average capacity is about 200 to 20 gigabytes, Because when I go and talk to them, it seems what they always complain about is that they cannot just get, highest density enterprise SSD. Yeah, Monica. It's good to hear your voice. So I I would I would say there's there's a couple of things going on that, I don't think the it has, has really grappled with yet. And what I specifically mean by that is you're now getting into what we call client and what we call enterprise. And this, this kind of gray in between, which, which some of our competitors call data center, which, in some cases, means enterprise, in some cases, means web 2.all and 80 scale out hyperscale architectures. So, so, so your comment is right on. There's, there's, there's multiple usages of SSDs and data centers. And, I think what you're referring to is this insatiable desire to have direct attached storage hoped up to a PCIeE interface in a data center. And so so you are absolutely right. What, what we're seeing is is, capacities ranging from 700 gigabytes up to 8 terabytes. And so what we've got on our product roadmap that, that we didn't show it today is our next version of the PCIe, SSD, that will have 16 terabytes raw on, on the component. And so now you're starting to get into just this fundamental dynamic of where do I fundamentally want to keep my data? I want to keep it on a server? Do I want to have a storage rate network? Do I want a little bit of both? Is PCIe really a cash or is it storage device. And, I can tell you that we've seen the full gamut. We we've got we've got customers who like our P320 because they want to use it as a cash, meaning they're going to write it a lot. They're going to dump it off and refresh it, etcetera. What you're talking about is more of what I would just call a direct attached storage model, something that, I think we all know the industry went away from many, many years ago, But, yes, that appetite for, NAND and SSD capacity, I think over the next couple of years is going to go through the roof. Then just another question on the PCM, given the high, very, very high endurance of PCM, could you maybe talk about the role of SS, you know, PCM in enterprise segment? And are you seeing some use cases or somewhere where PCM is used right now or where you think in the future it could be used? Yes. So that's a great question. You should, you should come to the flash memory from because, I've got a keynote where I'm going to talk quite a bit about fundamentally where I see some of these emerging memories and architectures changing the way the compute occurs over time. But, but, you know, I don't think we we don't have a lot of time, but I'll kind of give you my, my real quick and very We've been working with several key OEMs, IBM being one of them. They published several papers. I don't know if you've, you've got them, if not only sure that we get them to you, where they talk about the value of an emerging memory technology that has very high reliability and extremely low latency, sitting out PCIe drive. And so, so we delivered PCIe drives to them. They've, they've done with us a lot of benchmarking, and, I'll make sure that, Maka, that we get you a couple of those papers. But But clearly, it's the beginning of what we what we see is a major transformation over the next several years of what I would call the old school compute architecture to a new architecture that allows you to have very low latency nonvolatile memory being a more important piece of the compute platform. And so we absolutely see the value there. We're investing quite a bit not only in phase change memory and the scaling of that technology, but other emerging memory technologies that we think will help put us into a leadership position as we work with, the key ecosystem players in the industry to really transform the way data is dealt with on the compute platform. Thanks, Ed. And I would be at SaaS Summit, so I'll meet you over there. Sounds good. Thank you. Next question please. Next question comes from Kevin Cassidy with Stifel. Please go ahead with your question. Yeah. You listed down all the interfaces that you have. But I I didn't see, NVMe. Can you just say what your plans are for that interface? Absolutely. So NVMe is is a is an interface that we absolutely plan on supporting in fact that 5 20 drive that, I probably preannounced, and I'm I'm sure I'm going to get some interesting email on that. Is an NVMe drive. It's, it's, it's a controller, like the controller on the P320 P420 that was internally developed at Micron. It's a heavy hardware based controller. And, once again, we'll be able to saturate the PCIe3 interface and, differentiate, with a, again, a internally developed controller. But, yes, NVMe is critical to us and, you'll see product level details, in the near future. Maybe can you give us a handicapping of how you you think of that interface going forward? Is that going to be the standard or? I, you know, I think the industry right now is is grappling with that. I think, I think over the next couple of years, what's going to happen is, you know, everybody will come out with an NVMe, interface. My, my guess is that not all NVMe interfaces are going to be the same. And so it's like anything else as as the that that interface starts to mature yes, I do fundamentally believe that, that that interface, will will be something that will be here in big over the next, over the next several years. Obviously, there's other, PCIe interfaces that are, in protocols that are being talked about I would say it's a little early for us to comment on that. I can tell you, as I said, that we're absolutely committed to NVMe. You're welcome. Our next question comes from Glenn Young of Citi. But, you know, when we think about DRAM, we often will talk about it as a percentage of the biller materials, and there being some natural cap on the amount of DRAM that can end up in a client PC. I wonder if there's some similar way to think about SSD, you know, in terms of its dollar costs as a percent of client PC billing materials. I'll give you my take on that. I mean, clearly in a client, there are certainly, you know, like anything else you're absolutely right. There are price points by which, by which we start to see those capacity points move up move up And I think as, as Ireland said earlier, when we introduced that 1 terabyte drive, you know, we we introduced that at a price point, and I think we did the same thing with the 5.12 gigabyte client drive. Where, you know, we stimulated a reasonable amount of demand, but you're right. But the majority of the market, the sweet spot right now is somewhere in that two gigabyte range. And, you know, as a user of SSDs, I'll pay I'll pay every penny for it because the power, the performance, the ruggedness that it provides me personally, I think, is something that we're starting to see catch on. I think the other thing that's driving, certainly client is, these form factors are getting to the point where, you you first of all, you can't even upgrade them yourself and you can't, you know, you can't even fit, you know, the the the hard drive into them. So So there's this concept of, foreign factor. There's price point that are driving the client. On the enterprise, it's a it's a completely different animal. On the enterprise, it's really a performance total cost of ownership, that's driving the capacity. As, as, as, Monica asked earlier, 8 terabytes and beyond for these high, and drives or something that, that I think is critical. And maybe, Alan, you can, you can address this as well. Yeah, I think the only thing I would add, Ed, is that when we got to a price point for an SSD below $100, that's when we started seeing kind of an uptick in demand and penetration into at least some of the client, form factors. And so I think as you look at that when you get below kind of a dollar per gig is one of those metrics that, I think people are kind of watching very, very closely. It's going to move around a little bit because of, supply and demand, but for the most part, that's when we saw things really get stimulated. I wonder just in this context, when you think about, the kind of PCs or a tablet that the well, let's put tablets. So the kind of, client PCs or notebooks that that Intel, for example, has trends or to promote in this market. To what extent does the pricing of SSD, the availability of SSD help or hurt the ability to promote that kind of of new form factor. So if you're, if you're speaking of, you know, kind of their UltraBook initiative. Yeah. I think, Danny, if you look at, I'll kind of, I'll back away for that for a second and come back to it. But if you look at what Apple has done with their their Mac error and some of their form factors and only using SSDs that certainly, I think created a market awareness and a performance expectation that Ed was mentioning that he's so fond of. I think that has put a lot of pressure on kind of the competing OEMs and the form factors they're trying to bring to market and having that kind of experience, whether it's instant on power savings or the raw performance that you get from using an SST. And so I think there are price points that Intel has in their mind that they're trying to drive in the marketplace. And, depending on what capacity you're going to put in there, you can achieve those. But, and I think that's one of the areas that they're really grappling with, they're wrestling with, So how to get it into that sweet spot to really move from a velocity point of view, that platform. Okay. Just one one last question in two parts. If we were to fast forward, you know, let's call it 2 or 3 years from now. What proportion of your NAND revenues do you think will come from SSDN versus what is it today? And then secondly, what do you think will be sort of the average SSD density then versus what it is today? Wow. Well, maybe, I'll take a first stab at it and give Alan some time to think he can chime in with some clarifying comments. You know, I think In terms of the portion of our shipments that are going to SSDs, again, if you go look back at the pie chart that, we had shown that Alan had shown. It's already quite high. And, we don't really have a goal or a target on that. But, it's already quite high and we think that it will be at least that high for the foreseeable future, maybe higher. Probably a larger mix shifting to a higher percentage of our own SSDs, of course, as opposed to some of the third parties. And with regards to the average SSD density, That's a really tough question to address. We cited a couple of examples here that read the whole spectrum from our very cost competitive low density M500 drive, that can be 128,256 kind of gigs all the way up to some of the density that it mentioned, you know, whether it's in our, our data form factor or our PCIe form factor, 1 gig, 2 gig are here today. And we're we will be deploying products with capacities up to 16 in the not so distant future. And it really is a function of how those segments play out from a demand perspective. So the density question is a little, little harder to address. Maybe one of the things just to bridge this back to the to the your prior question is that we talked a lot about the price and the price elasticity elasticity. And I can't emphasize enough that one thing that we're seeing that's very different this year than last year with this very same issue In fact, if you go back to the Flash Memory Summit last year, when I had given the keynote, I had a had a graph in there that had talked about Alan's $1 per gig price point. And last summer, we were astonished that we had come pretty close to that price point And we hadn't seen the uptick. Well, no sooner did I say that than, as Alan mentioned, the demand turned on and that we've really realized that there was a a sensitivity there and, the rest is history. But I'll tell you this year, the thing that we see that's very different is that there is a very large portion of the SSD segments now that is incredibly priced in elastistic. They're certainly the enterprise customers are consuming a lot more now And their value is more around quality, reliability, stability, of the supply line, the ability to scale with their business and provide the NAND capacity that's required to source that. Winning designs there is is rarely about price, to be honest with you. And the same is true in this explosive data center category or, what some might call the web 2.0s, the industry has assigned a 3 letter acronym to a behavior here that's called large volume orders. And, people that are building out these data centers really would like to, they make those decisions fast. They need a ton of capacity very quickly. And that manufacturer, and more often than not, it has to, by definition, be a NAND manufacturer, has to be positioned to react to that sudden uptick. There again, the winner there is usually the person that has the capacity, the ability to supply, not so much the one that's hitting the right price point. Very helpful. Thank you very much. Our next question comes from Craig Ellis with B. Riley. Thanks for taking the question and nice presentation guys. Just going back to the slide that showed the range of products across interfaces and thinking about the two markets that you serve and the submarkets consumer and enterprise. Can you talk a little bit about controller development and how you approach that issue since it's so critical performance? Where does it make sense for Micron to do its own internal development? Where do you partner up? And are there opportunities where you, where you just go to 3rd party exclusively? Yeah. That that's a that's a very good question. It's certainly something that, I I would say over the past, several months, we've wrestled with as well. I can tell you, that on the enterprise high performance, market that utilizes PCIe, From the get go, we made the decision to, use an internal controller. And so we we've been very happy with that in, the progress that we've made with that controller in the solution. I can tell you going forward on our SaaS drive, we will be using our own internal controller for those products. And so, as as we, as we roll out the next version of our SaaS drive, it will have an internally developed micron controller, which will, it is more than a single instance of a controller it's a platform that allows us to have a common firmware base that will allow us to have different transport layers that, will give us the ability to move rapidly in terms of, building on an investment and a foundation of a platform. And so the real fundamental question is what's the ability to move that platform downward because it's going to start, out of the top where, I think as Glenn articulated, the investments there are supported, and the business is there to support it. So we are, we are actually in the process of dealing with how far down our roadmap we can actually, move those controllers and where it makes sense. I can tell you that, even if it makes perfect sense, your ability to do that and move those controllers as quickly as the market wants to move in certain instances despite you wanting to do it, maybe problematic. And so I would say long answer, but I would say our strategy going forward certainly on the bottom tier, or 2, is to have a dual pronged approach where we, we use internal controllers where it makes sense and we use external control is where it makes sense. That's great. Thanks guys. You're welcome. Our next question comes from Vijay Rakesh with Stern H. Please go ahead with your question. Yeah, hi guys. I know you on this PCI, you announced a 16 nanometer ramp. When you look at the SSD What what are you in terms of the 20 4, 19, 69,000,000 mix that you're seeing? Your question is specifically within SSDs, Vijay? Yes. Yes. It's, again, very good question. What's interesting, I think, as Glenn talked about, the different segments have very different cycle times. And so, down at the bottom of the segment portfolio, when talking about cloud web 2.0 or personal storage, our ability to introduce newer lithos into those markets that, that move much faster and are more on a cadence with the lithos that we introduce is much easier. And so, 20 nanometer in that M500, we ramped that very quickly after we brought the technology up. On the true enterprise level drives, I think as Glenn articulated earlier, the cycle time just to get those drives qualified, enterprise OEMs, you know, is is, you know, 9 months to a year. And so so so now now you have this almost year lead time to when you get your technology up, your drive completed, the year qualification. And then by the way, the customers say, don't change anything for 2 years. So you've got this, this, this delayed factor, which, which, you know, leads to the stickiness of the drive, in that particular application, and hence a very different business model that, that we have to make sure that our our factories, and our supply chain are, are able to handle. So, so, you know, as much as I love the scene there and say, Hey, that as drive is using our 19, you know, 16 nanometer, silicon that we just announced last week, you know, there is that delay factor that takes quite a bit of time. And so I think the secret for us is to figure out, you know, how do we work with the right OEMs to minimize is that. But I think as Glenn said, it's less about offering them a lower cost drive. It's more about having the drive there that they qualify the previous year. And so So we balance our portfolio based off of those differing dynamics by segment. This is Ivan. I'll just I'll give one quick examples, I think it's perfect to what Ed is describing, just talking to some of our sales guys just the other day about a particular customer who they had a chance to move to the next platform, the 20 nanometer platform, and actually, to be simplistic, paid us not to do it. Basically, I will pay you the difference to make margin better for Micron to keep to stay on the 25 nanometer platform as opposed to going through the the rigors of the qualification of 20 And, again, we make net better margin per wafer on that transaction now. So, you know, I think the right the the summary is we want to maximize our margins as a company. Got it. And the last question here when you look at the controller side, obviously, on the enterprise side, it looks like you're doing a lot of the controllers in house. And then shrink, obviously, the controller complexity goes up, the insurance and liability requirements go up. Can you talk about how that is helping you in terms of getting more dollar on the sale on an enterprise drive. Yeah, absolutely. I think, I think as Glenn showed on one of his slides, it's, it's fundamentally this concept of vertical integration. And and it starts with, that, that foundational knowledge base of what the NAND technology is really capable of doing. And, and, you know, I, I, I can say that, and, and we can talk to customers that we're selling the NAM2 to, to explain that. And we do in, in enormous amounts of detail, But, but with that, you know, there's nothing like having that firsthand knowledge and, and, you know, 25 years of experience of dealing with nonvolatile memories when you're sitting down to design a controller. And by the way, you got to remember that when you're designing a controller for the enterprise, The cycle time of design that controller is such that not only do you need to have the knowledge of the NAND technology that you're shipping today, you better know what that NAND technology is going to look like 3 years from now because that's about the cycle time of a good enterprise controller you better know what that is. Otherwise, you're going to design a controller that's not going to be in line with where the technology is going. And so So so so that concept of vertical integration where you understand you understand the fundamental technology, the timeline of where the technology is heading, Coupling that with your own internal controllers, you know, it it it almost guarantees if you do it right that you're gonna do a better job than anybody that doesn't have that knowledge. And and I can tell you that, you know, that's a critical piece of our strategic planning process that I think will ultimately enable us to be one of the winners long term in this market. Got it. Thanks. I'm not showing any other questions. I'd like to turn it back over for closing comments. Time. Yeah. Thanks again for all the great questions. I would like to thank everyone for participating on the call today. If you'll please bear with me, I need to read our safe harbor protection language real quick during the course of this call, we may have made forward looking statements regarding the company and the industry. These particular forward looking statements and other statements that may have been made on this call that are not historical facts are subject to a number of risks and uncertainties. Actual results may differ materially. For information on the important factors that may cause actual results to differ materially, please to our filings with the SEC, including the company's most recent ten Q and 10 K. Thank you. This concludes today's