Joanne Wallen reports from California on the prospects for storage specialist Quantum Corp.
Storage may not be sexy, but it is everywhere, behind any system the computer industry would care to dream up, and storage giant Quantum Corp is confident it now has the right products and the right business model to take it profitably into the next millenium. Having turned substantial 1995/96 losses into healthy looking profits for fiscal 1997 (CI No 3,154), Quantum says the future looks good. The Milpitas, California firm has seen two major restructuring exercises in as many years, and now, with an almost entirely new management team in place under the leadership of chief executive Michael Brown, the company reckons it has turned itself back into a profitable market leader. Tex Schenkkan, vice president of strategic planning and business development since last July, says although storage is never thought of as exciting, whatever happens to the computer industry in the future, people will always need to store data, and their demands are ever increasing. Since its acquisition of Digital Equipment Corp’s storage business two years ago, Quantum has product offerings across virtually the whole storage spectrum, including hard drives, DLT Digital Linear Tape, solid state disks and recording heads. Schenkkan says the company now caters for the whole spectrum of user from home office to enterprise client- server systems, and with both primary on-line storage and backup. He also hinted we should watch this space for mobile storage.
The company boasts 11,000 employees and turnover of $5.3bn, and, since the Digital acquisition, says it is a truly global operator. So what lead to the turnaround of fortune, and how will it keep up with competitors like Seagate Technology Corp? Quantum claims to have been one of the fastest growing technology companies in Silicon Valley over the past five or six years, and says since 1990 it has achieved year on year growth of 44%. It attributes last year’s $90m losses to the assimilation of the Digital acquisition, and reckons it has made some tough decisions to enable it to turn the business around. The company no longer manufactures hard drives, this is done by its long term partner Matsushita-Kotobuki Electronics Industries Ltd of Japan, and it has just set up a joint venture with Matsushita to manufacture its recording heads (CI No 3,154). This business had been a loss maker for Quantum, which produced only a small amount of the heads itself anyway, and used to source the rest from third party manufacturers. Schenkkan believes the new venture will enable Quantum not only to produce all of its own recording heads, but also give it an opportunity to sell them outside of the company. The Quantum/Matsushita manufacturing process is a highly automated process, which Quantum says gives it an extremely consistent high yield, and which Shenkkan reckons is the company’s unique selling point. One of the ways Quantum hopes to increase sales is by encouraging users to ‘think bigger’. Buoyed by reports from industry analysts the Gartner Group, and IDC, Quantum reckons the demand for storage is ever increasing, and it wants to encourage users to buy enough storage capacity to see them through the lifecycle of their computer. IDC has predicted that the useful life cycle of a personal computer will extend to three years or more. It says users are no longer prepared to throw out their investments in personal computers every 18 months. To match this, Quantum says users should now be looking to buy enough disk capacity to see them through the three or more year life cycle of their computer. Alan Wortman, Quantum’s product marketing manager says traditionally, by the time a user gets a new personal computer onto the desk top, the hard disk is already 25% full, taken up with the likes of Windows 95 software and other application requirements. In 18 months, the disk will be at least 80% full, and will need upgrading. Wortman reckons that if users start with the disk only 10% utilized, this will give them capacity to last the life time of the computer itself. Applications such as full motion video, through the internet or Digital Video Disk, will also enormously increase storage requirements. To this end, the company is now shipping 6.4Gb hard drives, and Wortman says that Quantum’s OEM customers will also be shipping both 8Gb and 12.25Gb drives by the end of this year.
Viking and Atlas
The company’s high end workstation and server group, with its Viking and Atlas II range of hard disks made a profit for the first time this year, and it reckons the high end business is growing at 20% to 30% a year, with the key drivers being transaction processing and data warehouse-type applications. On the back-up front, Quantum says it has seen a dramatic growth in sales of its DLT tape business, which it inherited from Digital, and Shenkkan says this business is now very profitable. The company’s speciality storage products are also expected to see increasing growth over the next few years. In particular, Quantum’s solid state disks, which provide data access times claimed to be up to 15 times faster than magnetic disk drives, should also see increased demand, according to IDC projections that the solid state market will grow at a compound rate of 19% this year. Shenkkan is not concerned whether the industry turns to the network computer in the future or sticks to the desktop personal computer. Thin clients will simply mean more server storage, he says, so either way it should be good news for Quantum. His mission is to continue to explore and evaluate new storage opportunities, and says the future may see the company involved in intelligent, network attached storage. Either way, he reckons Quantum is extremely well positioned to be equally or more successful over the next five years.