Sky-high flash prices: data reduction or tier to disk?

As SSD prices rise we wonder whether we’re seeing a panic-buying storage media price rise bubble or is AI-driven demand real? In either case, what should we do about it?

SSDs cost more than disks so a default response would be to use less flash. VAST Data supplies all-flash storage and a co-founder, Jeff Denworth, says we should use its data reduction technology to cram more data into less flash: ”Our customers can stretch their flash allocation by 2x vs other products. It’s not just good for power, space, cooling and budget dollars… VAST’s efficiency innovations are a pressure-relief valve on the global supply chain pinch.”

StorONE co-founder and CEO Gal Naor takes a different approach; cram less data into flash in the first place. An email interview revealed his thinking.

Blocks & Files: Are we in an AI-fuelled bubble?

Gal Naor: Over the past few months, we’ve been asked the same questions again and again by customers, partners, and IT leaders:

What is really driving the surge in storage prices?
Does it make sense to start new projects while prices keep rising?
Should we delay investments while everything feels like a moving target?

These are valid questions, that come from real-world budget pressures, uncertainty and stalled decision-making. At the same time, we see public market valuations of storage, infrastructure, and semiconductor companies clearly reflecting that the market recognizes a structural problem, one we’ve been warning about for quite some time. So, the real question becomes: “What is actually driving this crisis and what will end it?”

Blocks & Files: Is it real demand or artificial inflated behavior fueled by fear?

Gal Naor: If the demand is real, it is largely driven by AI workloads. And if that’s the case, it is not going away and it will only accelerate.

AI usage is expanding across more organizations, more applications, and more hours per user per day. Data volumes continue to grow, models get larger, and retention requirements increase. If this is genuine adoption, then demand will continue to rise regardless of short-term market corrections.

If what we see is panic buying; organizations rushing to stockpile flash due to rising prices, then at least part of today’s demand is artificial. In that case, we are not reacting to usage growth, but to fear of future scarcity.

Blocks & Files: How will we know which is which?

Gal Naor: We’ve seen this before. At the beginning of COVID, rumors of toilet paper shortages triggered mass buying. Shelves emptied. Prices spiked. Panic reinforced itself. But the demand wasn’t real. People weren’t using more toilet paper; they were just buying more at once.

Eventually, demand collapsed and prices normalized. We have to ask ourselves now if we see the same pattern in storage? Is someone creating an artificial shortage, intentionally or unintentionally, causing organizations to buy flash far ahead of actual needs? Are we pulling future demand into the present? Or is the underlying assumption correct, that more users, running more AI workloads, for more hours, will genuinely consume more storage capacity over time? The answer to that question determines everything.

Blocks & Files: It seems that no-one knows. What does this means for a customer’s storage strategy?

Gal Naor: Regardless of how this plays out, one thing is clear: blind spending is the wrong response.

If you expect future growth, buy the minimum amount of flash you actually need today. Flash prices will eventually normalize. Overbuying now likely locks in unnecessary cost.

Additionally, it is important to understand how much of your growth is cold data. Most data becomes inactive quickly and does not belong on flash. Do not pay flash prices for cold data. Use HDD where it makes economic sense. Re-use what you already own. Many organizations already have unused or underutilized flash drives sitting in their data centers. Those assets should be part of the solution, not ignored.

Smart storage in this market is not about stopping projects, it’s about designing architectures that match real usage, real performance needs, and real economics. The companies that win won’t be the ones that spend the most. They will be the ones that think clearly while others panic.

Blocks & Files: Whether increased storage media prices are due to panic buying or real demand what is the best customer strategy?

Gal Naor: In an environment defined by uncertainty, volatility, and rapidly rising flash costs, auto-tiering should be the default storage strategy. Auto-tiering directly addresses the flash cost problem by reducing the amount of flash required by up to 90 percent, while still delivering flash-level performance where it actually matters. At the same time, it solves the cold data challenge by keeping inactive data accessible, protected, and tightly integrated without forcing organizations to pay flash prices for it.

Just as importantly, auto-tiering preserves flexibility. As needs evolve, organizations can independently expand either flash or HDD capacity, without redesigning the architecture or locking themselves into a single cost structure.

In times like these, the smartest move is not to blindly follow an “all-flash” narrative, but to consult with a storage expert who understands the full spectrum of architectures and options, not just AFA. Smart decisions today will define who stays agile, efficient, and resilient tomorrow.

Bootnote

StorONE CEO Gal Naor tells us: “We do not implement deduplication or compression in our system. We believe that reducing costs through smart auto-tiering is a far more economical and effective approach, and we have a blog post that explains this in detail. For context, I’m very familiar with the compression space, I previously founded Storwize, which was the first to implement on-the-fly compression, and I know firsthand the costs and tradeoffs involved.”