My view about Fusion-io’s rolling losses is that part of this is due to the continuing investment (in technology, sales and marketing) which any similar company has to make in a fast changing. fast growing tech market – but another factor in its profit equation may the high proportion of its business which goes to a small number of big customers. It’s just a fact of life that when storage companies sell to server oems and super users they have to sell at a lower price than if they’re selling to other types of customers – because there are competiutors out there who will also buy this business opportunity. But even in the dearth / absence of profit in such deals- the high sales volumes which result – speed up positive outcomes in other factors which can be healthy for future business development.
- bugs are ironed out sooner,
- the products are more reliable,
- the products become more widely known
- the products are supported on more platforms
- the products are incrementally cheaper to make
It is to be hoped that at some point in the future – as the innovation curve flattens – and the technology creator’s brand strengthens and the product becomes a sticky standard supported by compatible 3rd party partners – the margins in the product itself and in the channel mix may change for the better. (Licensing dealstoo are another possibility for extracting more profit from high volume oem customers.) There are no guarantees in any competive market but that’s my way of trying to make long term sense of what’s going on in some hot spots in the SSD market today.
(full article here: http://www.storagesearch.com/ssd.html)