STEC CEO Manouch Moshayedi said during the vendor’s earnings call Tuesday that the largest storage vendors – STEC’s OEM partners – are marking up SSDs from around $2 per gigabyte to $4 gigabyte to around $50 per gigabyte to $70 per gigabyte, and that is slowing the adoption of SSDs in enterprise storage.

“Frankly, from where I see it, the pricing that they’re charging is a little unsustainable on the SSD side because its 30 times what is out there available [from the SSD manufacturers],” Moshayedi said. “I think that pricing has to come down in order to really get SSDs out into the market through the major data storage system builders.”

He said SSDs are being more widely adopted by cloud computing service providers and data centers that use one SSD per server because they are getting flash at a lower price than by buying it in storage arrays.

“So when you look at it, it’s a big price differential [between what storage vendors pay and what they charge customers],” he said. “Therefore people in data centers that don’t have to buy big data storage systems can use SSDs a lot more than data storage [users] can.”

EMC, IBM, Hitachi Data Systems and Hewlett-Packard all sell STEC SSDs in storage arrays.

STEC has a lot more to worry about than its partners’ pricing these days. The vendor’s second quarter revenue of $40.7 million was less than half of the $82.5 million in revenue from the same quarter last year. Revenue also dropped 19.2% between the first and second quarters this year. STEC lost $50 million, marking its third straight quarter in the red.

Moshayedi blamed STEC’s problems on its transition to next-generation SSD drives as well as new PCIe SSD cards and EnhanceIO caching software. Its largest storage vendor partners are still qualifying those products. The near-term outlook isn’t rosy with the forecast calling for revenue of $40 million to $42 million and another big loss this quarter.

On top of that, the Securities and Exchange Commission (SEC) has charged Moshayedi with insider trading. The SEC claims Moshayedi and his brother  Mark — a STEC founder – failed to disclose information that could have lowered the stock price at the time they were selling shares that brought them $134 million.

Moshayedi called those allegations “unsubstantiated” during the Tuesday call. “I intend to vigorously defend myself against unsubstantiated allegations, and we expect that through an independent evaluation of facts we’ll find the complaint is without merit,” he said.

Now it appears that EMC may add one of those product types by acquiring all-flash storage array startup XtremIO. Israeli business newspaper Globes today reports that EMC is discussing a buyout of the Tel Aviv-based startup for $400 million to $450 million.

While EMC can offer its traditional arrays with all solid-state drives (SSDs) in place of hard drives, XtremIO is part of a rapidly growing group of startups that engineered their systems from the ground up to take advantage of flash. The XtremIO Flash Array is still in customer trials. The vendor positions it as a way to lift I/O constraints for applications such as Oracle or SQL databases, ERP systems, and virtual desktop infrastructures or other heavily virtualized environments.

One of XtremIO’s founders, Shuki Bruck, also founded file virtualization vendor Rainfinity and sold it to EMC in 2005.

An EMC-XtremIO acquisition could start off a feeding frenzy for traditional storage vendors looking to accelerate their ability to take all-flash arrays to market. Globes reported NetApp executives have also visited Israel to talk to XtremIO (Wall Street rumors also say NetApp is looking at buying Fusion-io). Other all-flash vendors that might make acquisition targets include Violin Memory, Nimbus Data, SolidFire, Texas Memory Systems, Kaminario, GreenBytes, Pure Storage and Whiptail.