Toshiba's OCZ acquisition: what it means for both companies

In January 2014, Japanese giant Toshiba made a move for Silicon Valley's OCZ Technology Group, snapping up the firm's assets and launching a new subsidiary, OCZ Storage Solutions, in the process.

With the partnership now six months old, the time is ripe for an assessment of how the acquisition has affected both parties, and what this could mean for the SSD industry as a whole.

With this in mind, we spoke to both Seiichi Mori, VP of Toshiba's Storage Company and Corporate Vice President of Toshiba, and Ralph Schmitt, CEO of OCZ Storage Solutions, now a Toshiba Group Company.

TechRadar Pro: Seiichi, why didn't Toshiba absorb OCZ rather than allowing it to sit as a standalone entity (divide and conquer approach?)

Seiichi Mori: OCZ is a company who has built up capabilities in R&D, manufacturing, marketing and sales of SSD products with strengths in each area. This is the backbone of the strong OCZ brand known today in the SSD space. It was important for us to keep the team and their capabilities intact while identifying areas where improvements can be made with the integration with Toshiba.

TRP: What were the primary motivations for acquiring OCZ? Was there a focus on bringing in the talent or the technology?

SM: Our motivations had been driven by our interest in acquiring the unique talents and technology which has created the OCZ business. The company, under talented management, functions as an efficient team to develop, manufacture and sell leading edge SSD products. We wanted to combine this team into our leading NAND business team for the benefit of both teams.

TRP: Where does OCZ sit within Toshiba's Semiconductor and Storage business unit?

SM: In general, SSD product is one of the fastest areas of growth in NAND Flash application and is a key focus for our Semiconductor and Storage Company. We are confident that OCZ not only reinforces our resources in the SSD products, but will also further strengthen our presence in the market.

TRP: OCZ has always had a strong brand in the high performance and enthusiast space, moving forward can we expect to see OCZ Storage Solutions continue to serve the client market?

SM: Yes. Not only will OCZ continue to address these markets utilizing the proprietary controllers, we are jointly making efforts to quickly combine them with our latest NAND Flash technology products. You can expect even more products coming on line under the OCZ brand for these markets.

TRP: How are you making sure that there's no overlap between the two brands especially as both address consumer and enterprise SSDs?

SM: The SSD business of OCZ is very supplemental to Toshiba in both product lines and the channels in which the products are delivered to the end customer, with only a small overlap currently. We are taking steps to further reduce the overlap for future development to better improve our efficiency to meet market needs.

TRP: Will any of OCZ's controller and firmware technology be leveraged in Toshiba solutions?

SM: OCZ Storage Solutions will leverage Toshiba's cutting-edge NAND and combine it with the Company's proprietary controllers, firmware and software to provide both client and enterprise customers with innovative and cost-effective solid-state storage solutions.

Since OCZ storage solution is already a part of "Toshiba solution", naturally, we will be looking into opportunities to use it for Toshiba branded products but the challenge is to do so without interrupting the on-going development activities.

TRP: Where do you see the consumer and business SSD markets heading over the next few years? The same trajectory as HDDs with consolidations and bankruptcies?

SM: Unlike HDDs, due to the nature of NAND Flash, solid-state storage systems have very little limitations in form factors as well as opening up possibilities for system architecture. Aside from USB memory, memory cards, smart phones and tablets, the vast majority of systems are still limited by the legacy design and architecture which had used HDD as the primary storage for years.

SSD is also one such form factor. Many companies have started to address these issues and I expect many more will follow. I believe OCZ's experience in leading the initial phase of SSD market creation will be valuable for us to address these moves in the market going forward.

TRP: Ralph - how has the transition to the new company, OCZ Storage Solutions, gone this first quarter? What have been the biggest challenges?

RS: The transition has gone more smoothly than even I had envisioned. We have been able to retain over 98% of the people and there is an excitement that has been missing at OCZ for a while. Toshiba has essentially left us alone to build back the business. That, however, is also what has been the biggest challenge; getting customers to trust in OCZ after a very tumultuous year.

TRP: What has happened to the rest of the product portfolio of OCZ - PSU, memory etc?

RS: We discontinued all memory products long before the close of the Toshiba transaction. We sold off the PSU business to a group that committed to support our existing long-term customers, which was a win for everyone involved.

One of the other key changes for us is that we are no longer manufacturing. We sold that entire group to PTI in Taiwan, who are a long term Toshiba partner. This takes our cost model down even further and allows us to focus on developing and driving products into production. It takes some of our resources away from mundane things like yield enhancements and other production related items.

TRP: What is the focus of OCZ's future offering when it comes to the client market?

RS: OCZ has always been known to push the limits in performance. For the client market we are biased towards that end, supporting mostly enthusiasts and gamers. As an example we just launched our latest Revo PCIe based drive that just shatters performance levels for this set of customers.

We have full control of the controller and firmware development and now have access to the "guts" of the flash allowing us to better optimize for this type of category of products. We are taking a lot of the enterprise product robustness, reliability and quality procedures and applying them to client drives, and follow a very diligent development phase gate system to ensure a quality product.

Our return rates in client drives have just plummeted based on what we now do to bring them to market.

TRP: In the new OCZ Storage Solutions company is there a level of collaboration between Toshiba and OCZ's R&D?

RS: Absolutely. We have already learned a significant amount of what we need to do in our controller development to support next gen flash. OCZ has also stopped developing SAS drives as this is a strength of Toshiba's, and that allows us to focus more on our core capability in SATA and PCIe. We have very little overlap of products today, and a year from now we will ensure there is no overlap.

TRP: Can you tell us anything else about what is coming down the roadmap? What can customers on both sides, client and enterprise, expect over the next twelve months?

RS: The client news will be the launch of a TLC drive, and for enterprise we will be releasing a series of new PCIe drives. You will also see Gen 3 NVME based drives in a 2.5 inch, M.2 and edge card form factors.

TRP: The competition has had a lot of success with TLC based SSDs for the value market, can we expect to see a TLC drive from OCZ in the near future?

RS: Yes, and it can't happen fast enough. This is a drive we have partnered with the Toshiba Client SSD group and expect to release in the coming months. While it will not play directly into our performance oriented strategy, it does round out our client portfolio. This is something that is important to our channel partners as it drives further volume.

TRP: What does the future of SSD entail? Unified memory? 3D? SHDD?

RS: 3D will be the next big wave. Our next gen controller will support this type of memory technology, however I believe we are at least a year away from seeing a drive in the market based in this technology.

TRP: In closing, is there anything you would like to say to our TechRadar Pro readers?

RS: OCZ is back with a vengeance. We have the backing of the largest NAND supplier in the world, and the company has gone through a major transformation. It is our belief that without the core NAND technology a standalone SSD company will not be able to compete long term.

We now have all the technology pieces necessary: silicon controller technology, firmware, application software and NAND. We are very excited to continue to bring out leading edge products for our customers, as Toshiba has kept us separate it allows us to be lean and mean, giving us an even greater degree of flexibility to deliver for our customers.

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