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After preaching the superiority of its DLT tape format for years, Quantum has up and bought Certance, a key maker of the rival LTO format.
Certance is a member of an LTO consortium with HP and IBM. While DLT has remained competitive in capacity and performance, it has lagged LTO in market share.
Now with the acquisition of Certance, Quantum is entering the LTO market, acquiring a stronger presence in the low-end market, and also getting other formats like DDS in the process.
"This is a superb move because the two companies have historically been strongest in different parts of the market — Certance in the entry-level and Quantum in the midrange," said Bob Abraham, president of Freeman Reports. "The combination will create operational synergies, benefiting end-users and helping to address the desire of system OEMs and tape automation providers to streamline supply chain management."
"When I compare the roadmaps of SDLT vs. LTO, I see a path of divergence," Abraham told Enterprise Storage Forum. "SDLT is becoming more capacity-centric and LTO is performance-centric. Different applications are served — there is less overlap than is apparent at first glance. Quantum will manufacture both; the others manufacture one and resell the other. Quantum also picks up DDS and Travan — cash cows and an instant entry into the entry-level server market."
Quantum will acquire all of Certance for $60 million in an all-cash transaction, and integrate it into Quantum. The purchase price excludes the distribution to the sellers of up to $34 million in cash from Certance's balance sheet. Quantum expects the acquisition to close in the fourth quarter.
Certance has been profitable for the last three years. Quantum said the acquisition is expected to be accretive to earnings in the combined company's first year.
With the acquisition, Quantum said it "will offer end-users an unparalleled range of leading tape technology choices for best meeting their individual backup, recovery and archive needs."
"Today's announcement reinforces Quantum's commitment to providing customers with tape technologies best suited for current and future environments," stated Rick Belluzzo, chairman and CEO of Quantum. "As a newly combined $1 billion company building on Quantum's and Certance's complementary strengths, we will offer the industry's broadest portfolio of tape and disk systems for backup, recovery and archive."
As a result of the acquisition, Quantum will add Travan, DDS/DAT and LTO Ultrium format technology products to its current portfolio of DLTtape drives, as well as a DAT-72 autoloader and a disk-to-disk-to-tape appliance for small and medium businesses (SMBs). Quantum said the addition of LTO technology devices to its Storage Devices product lines will create greater alignment with its Storage Systems business, which already offers LTO Ultrium format drives in its tape automation systems.
As for HP and IBM, Quantum spokesman Brad Cohen said, "We've been working with both of them in a spirit of cooperation and competition for many years. We believe the acquisition will provide the opportunity for an even closer relationship, particularly as Quantum joins HP and IBM as an LTO Technology Provider Company."