Feeds

Quantum struggles to break restraining chains

It hasn't got its growth taped - yet

Top three mobile application threats

Comment Still making a loss, still facing revenue declines, still making progress; that's Quantum's fiscal 2009 story in a nutshell.

Rick Belluzzo's company recorded final fiscal 2010 revenues of $164.45m, down from the year-ago quarter's $168m. There was a loss of $4.37m, an improvement on the year-ago loss of $11.9m.

The full year results provide a more pleasing picture. Fiscal 2010 revenues were $681.43m, down, as expected, from fiscal 2008's $809m. But in a pleasant surprise, fiscal 2010 net income was positive, a profit of $16.63m, as opposed to fiscal 2009's thumping loss of $358.3m.

Other good things were the fiscal 2010 profit, Quantum's best such performance in eight years, and the year's 41.1 per cent gross margin, the best for nine years.

There's visible progress in moving Quantum away from the declining tape market and OEM sales and towards the sunny prospects of disk-based and software products. Belluzzo said that DXi deduplicating storage arrays recorded good growth and the StorNext file system layered on a SAN made progress too.

These two products are expected by Belluzzo to be main drivers of growth in fiscal 2011 where Quantum's focus is going to be firmly on revenue growth. Quantum now describes itself as a storage systems company, not a tape or a data protection company.

Disk systems revenue in fiscal 2010 were $95m, compared to $23m in fiscal 2009. Its other focus is to move to Quantum-branded product sales and away from OEM sales. There's progress here too, branded business in fiscal 2010 being 74 per cent of non-royalty revenues, up from 67 per cent a year ago.

It's very, very hard for an established company in a declining market sector like tape to break free of the restraining chains and become a growth star. Such companies are rarely first into a booming market and garner second-level benefits, not the first-level ones enjoyed by companies like Data Domain who face no legacy baggage constraints.

Quantum is far from abandoning the tape market, launching new libraries and LTO5 kit recently. However, its disk and software revenues are still not growing fast enough to compensate for declining tape system revenues, and the fiscal 2009-2009 revenue decline is mostly due to lower OEM revenues, meaning lower tape system revenues.

Will Quantum break free of its past in its fiscal 2011? That depends on how well it rides the deduplication wave, where Data Domain recently introduced OST-based deduplication pre-processing to Symantec media servers and gained a substantial performance boost. Quantum surely must do the same thing as fast as possible - it already supports OST - and extend the same facilities to the other backup software suppliers equally quickly. It simply cannot afford to get trounced and left behind by Data Domain.

Secondly, in El Reg's view, Quantum must keep an eye on the inline deduplication of primary data being offered by Nimbus Data and WhipTail and, as soon as the performance and longevity claims are substantiated, leap into the market with flash-based DXi products and lead the market.

Then, of course, there is the cloud. Quantum needs a strategy, and could partner with a cloud service and product supplier, such as Nirvanix to have old and inactive data squirted off from DXi boxes to the cloud. You can imagine Belluzzo's eyebrows raising at this: "More trouble. Don't you realise that tape is the best and cheapest long-term data archival storage medium?"

Granted, Quantum gets bennies from linking its disk boxes to its Scalar libraries in an overall D2D2T scheme but the world is moving on, on towards D2D2C where C means cloud. It's no use being in denial; it's happening and Quantum needs, we feel, a cloud strategy as well as a tape strategy. If it could store tape data in the cloud then that would be a neat and unique trick to pull.

Back to earth and the DXi products; the StorNext software doesn't have such good growth prospects in our view, and the key to earning much more cash in its current and next financial years is the DXi line. It has to succeed for Quantum to succeed in becoming a growth company again. ®

High performance access to file storage

More from The Register

next story
This time it's 'Personal': new Office 365 sub covers just two devices
Redmond also brings Office into Google's back yard
Kingston DataTraveler MicroDuo: Turn your phone into a 72GB beast
USB-usiness in the front, micro-USB party in the back
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Inside the Hekaton: SQL Server 2014's database engine deconstructed
Nadella's database sqares the circle of cheap memory vs speed
BOFH: Oh DO tell us what you think. *CLICK*
$%%&amp Oh dear, we've been cut *CLICK* Well hello *CLICK* You're breaking up...
Just what could be inside Dropbox's new 'Home For Life'?
Biz apps, messaging, photos, email, more storage – sorry, did you think there would be cake?
IT bods: How long does it take YOU to train up on new tech?
I'll leave my arrays to do the hard work, if you don't mind
Amazon reveals its Google-killing 'R3' server instances
A mega-memory instance that never forgets
prev story

Whitepapers

Top three mobile application threats
Learn about three of the top mobile application security threats facing businesses today and recommendations on how to mitigate the risk.
Combat fraud and increase customer satisfaction
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
SANS - Survey on application security programs
In this whitepaper learn about the state of application security programs and practices of 488 surveyed respondents, and discover how mature and effective these programs are.