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October 15, 1997updated 03 Sep 2016 7:46pm

TERASTOR SAYS STORAGE WILL MAKE IT A $1BN COMPANY

By CBR Staff Writer

For years Moore’s law, originally coined in 1965 to describe the doubling of the number of transistors on a single chip every 18 months to two years, could equally have been applied to data storage. For the best part of three decades, with monotonous regularity, storage capacities on everything from the smallest to the largest computers increased hand-in-hand with microprocessor power. But despite warnings that the capacity limits of magnetic storage could soon be reached, TeraStor, a San Jose, California company established in December 1995 by Quantum and Maxtor founder Jim McCoy, claims it has the technology to blast Moore’s law out of the water. TeraStor claims its ‘near-field’ recording technique, which combines attributes of both magneto-optical and hard disk drive technology, can at a stroke produce a 1000% increase in disk storage capacity. The company also claims that it can potentially be applied to any storage solution from high- end RAID devices and tape libraries to the hard drives and portable media present on every desktop PC.

Impressive pedigree

‘Near Field Recording & Trade’ is the trademarked name for the company’s technology, which has been developed from patented research belonging to Stanford University and Quantum. TeraStor has added value in the form of linking technology which makes Stanford’s and Quantum’s work fit together more effectively. The most important elements of TeraStor’s design are the device’s flying head and solid immersion lens. The flying head is similar to that used in a hard drive but includes two optical lenses and a magnetic coil. The solid immersion lens (SIL), developed by Stanford University, focuses the optical laser accurately on the recording media and thereby allows data to be recorded on magnetic media in a more compact form than previously possible. Tera-Stor claims that this increases ‘areal density’, and therefore capacity, by a factor of ten compared with existing storage technologies. Although products based on TeraStor technology could be as much as nine months away – products are promised in the first half of 1998 – the impressive pedigree of McCoy and his co-founders has already convinced Quantum and a number of Silicon Valley venture capital companies to invest approximately $50m in the venture. Its backers include Vulcan Ventures (the investment vehicle of Microsoft founder Paul Allen), Information Technology Ventures, Charter Venture Capital and Venture Law Group.

By Graeme Burton

The company will shortly be going back for a further funding round to ensure it has enough working capital for an impressive launch. McCoy’s business strategy is double-edged. Partnership in the computer industry is, of course, a must, and TeraStor has forged relationships with a number of companies to share the development workload: 3M spin-off Imation has been signed-up to develop the media, Silicon Systems is to supply the semiconductors, Japanese company Olympus is co-designing and manufacturing the optics, and a number of library manufacturers, including Exabyte and Plasmon, have been selected to take the TeraStor technology into a range of managed storage markets. In addition, storage giant Quantum, a substantial minority shareholder, has been signed up as a licensee of TeraStor technology. But McCoy’s aim is not for TeraStor to just license its products. He believes that it should use its technology to become a major force in storage. Further licensees are therefore unlikely. TeraStor has also promised that, nearer the launch, it will be setting up offices in major overseas markets and recruiting a direct salesforce in order to satisfy McCoy’s ambition of becoming as big as Quantum or EMC in as short a time as possible. Within a few short years our aim is to be a multi- billion dollar company, says Skip Kilsdonk, vice president of corporate planning and strategy. It is hard to find chinks in the company’s armor but it does have a few. If development falls behind schedule that could open a window of opportunity to larger competitors, and TeraStor is not alone in developing new mass storage products. IBM is in the race (but not releasing any details), and in July, Seagate acquired one year old start-up Quinta in a deal worth up to $325m. Seagate chief executive Alan Shugart is promising a product announcement before the end of the year but TeraStor is dismissive of Quinta’s technology, claiming it can only achieve 25% of the capacity of TeraStor’s drives. Details on how development is progressing are sketchy and product and pricing strategy has yet to be fleshed out beyond Kilsdonk’s promise that for any given storage capacity we’re going to look very low cost.

Compelling reasons

Furthermore, for all the experience in the storage industry of Jim McCoy and his co-founders, growing a company from nothing into a two or three billion dollar business is not without its logistical problems. Bob Abraham, vice president of storage research specialists Freeman Associates, while impressed with TeraStor’s offerings on paper, warns that entering the storage industry can be difficult. You’ve got to have very compelling reasons why people should want to use your media, says Abraham. But should TeraStor take off even half as dramatically as McCoy hopes, it could lead to a shake-out in the storage industry. Abraham believes that the leading suppliers of optical storage and tape back-up devices in particular should be showing some concern at what TeraStor is developing. Certainly, few would lament the passing of slow and frequently unreliable tape storage. If McCoy can help finish off this relic from the mainframe age, his latest contribution to the storage industry could end up being his best. This article originally appeared in Computer Business Review.

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