Quantum Prepares for Life After EMC
EMC (NYSE: EMC) has said it plans to keep selling Quantum's data deduplication solutions despite its acquisition of Data Domain, but Quantum (NYSE: QTM) isn't taking any chances (see What's Next for EMC, NetApp and Quantum?).
On the company's quarterly earnings call earlier this week, Quantum CEO Rick Belluzzo said the company is busy looking for other sales channels for its DXi dedupe offerings.
"While we expect a continued revenue stream from EMC, it is very clear that their focus will rapidly shift to the Data Domain technology," said Belluzzo. "Therefore, while we will continue to partner with EMC, we recognize that our revenue stream will need to develop in other areas."
Quantum said its disk systems sales were $19.2 million in its first fiscal quarter, down $800,000 from the year-ago quarter. Quantum's overall sales fell 28 percent to $160 million, as the company's tape business suffered along with the rest of the economy. The company ended the June quarter with $78 million in cash, down from $87 million at the end of the March quarter.
CFO Jon Gacek said the six-week bidding war between EMC and NetApp (NASDAQ: NTAP) for Data Domain hurt sales in the quarter. "EMC's bid for Data Domain and some of the misperceptions this created about Quantum had an impact in Q1, as both license revenue and branded revenue were down sequentially," he said.
But July has been "very strong" for disk sales, Gacek said, including a couple of deals greater than $1 million. "Those deals probably would have been EMC deals, you know, beforehand," he said. "Now the customer is buying those products from us."
Gacek said the company plans "a new midrange disk product this calendar year that will be a very good product for our branded channel partners."
Belluzzo said the new offering "will significantly improve our midrange NAS position and strengthen our channel business. In addition to this, the EMC-Data Domain transaction does create some disruption among VARs, which makes this launch ideal. We've been working on this product for over a year and we intend to launch this in the most aggressive manner possible."
Gacek said Quantum will soon release a software upgrade that will improve replication performance. "It's been very well received by us and by the EMC team as they've tested it," he said.
Belluzzo said Quantum is "currently in discussions with new potential go-to-market partners that are interested in becoming more active in this space. It is too early to indicate timing, but there is no doubt that some new level of partner engagement is likely to occur. The EMC-Data Domain transaction has elevated the priority of deduplication and has created some instability among several storage companies, and we will move decisively to determine which opportunities have the most promise."
Dell (NASDAQ: DELL) is among the companies that have been working with Quantum (see Dell Turns to Partners for Dedupe).
Belluzzo said the dedupe market is still in its infancy, noting that less than 20 percent of customers have adopted the technology so far. "So that's opportunity for growth," he said. "Thats why there's three times growth over the next several years."
"The EMC action does require us to alter our execution priorities, but we have been very focused on expanding our product line and providing more opportunity for our DXi technology," said Belluzzo. "All of this leads to a very focused goal of growing our disk systems and software business with a very high sense of urgency."
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