Exabyte sees Mammoth 2 as another shot

BOULDER – In the race to release the best and fastest tape storage devices, Exabyte Corp. says it will come in first.

It’s no secret: Exabyte is hanging high hopes on its Mammoth 2 product to help rebound from losses in revenues earlier this year. The Boulder-based tape storage manufacturer in August announced plans to cut 200 employees from its worldwide workforce of 1,275 employees, a move that company officials said would net them annual savings of $11 million.

Earlier this month, the company reported gains of about 9 percent in third-quarter revenues from second-quarter revenues of $48.5 million to $53.04 million for the quarter ending Oct. 2.

“Revenues reversed a downward trend that we had experienced in the past four quarters and were in line with our expectations,” says Exabyte’s Chairman, President and Chief Executive Officer Bill Marriner, who emphasized that one of the company’s main objective was to bring its Mammoth 2 product to market sometime this quarter.

Mammoth 2 is the second generation of earlier technology and is important for Exabyte because it is compatible with storage area networks (SANs), the new rage in the data storage industry. SANs are hot items, industry experts say, because they allow businesses to pool and access information in one area instead of on multiple tape drives and tape libraries.

Steve Smith, Exabyte’s chief financial officer and general counsel, says the Mammoth 2 has three times the storage capacity and a transfer rate that is four times faster than its predecessor.

“Instead of three megabytes per second, it will transfer 12 megabytes in native mode, and the capacity is roughly tripling — roughly 20 gigabytes to 60 gigabytes,” Smith explains. “That’s a very significant leap from Mammoth 1 to Mammoth 2.”

Industry experts agree and add that if Exabyte is indeed the first to bring the Mammoth 2 to market, it again will gain the spotlight and market share.

“They’ve slipped a bit over the last several years,” says Bob Amatruda, industry analyst at International Data Corp., based in Framington, Mass. “(The Mammoth 2) will give them another opportunity to crack into the high-performance marketplace.”

In September, Exabyte — perhaps to shed some early light on its new offerings – launched a Web site (www.mammothtape.com), a marketing tool that the company says is dedicated to “broadening the knowledge-base and furthering the widespread adoption of MammothTape software. Also in September, Exabyte was cited as the first tape storage company to join with FibreAlliance, an association of Fibre Channel hardware and software providers, that is working together to integrate SANs.

“Our membership further displays Exabyte’s commitment to providing customers with fully interoperable SAN solutions and SAN resource management,” says Mike Koclanes, general manager and vice president of Exabyte’s state network solutions division.

The problem with SANs so far has been getting components to work together. And Exabyte is doing the right thing by focusing their resources and energies on coming up with a solution, says Bob Abraham, vice president of Freeman Associates, an industry analysis firm in Santa Barbara, Calif.

On Oct. 11, Exabyte launched its NetStorM Resource Manager software, a browser-based package that can page, e-mail or alert an administrator when failures or performance problems occur with storage area network components.

NetStorM supports products such as Integrated Application Support, Exabyte Arrowhead Libraries, Fibre Channel-to-SCSI routers, Brocade Switches, and Vixel and Gadzoox hubs.

“Exabyte is not just developing SAN components,” Koclanes says, “we are working to set the standard for what networked storage will become.”

But the looming question will be how long Exabyte will get to bask in the glow if one were to look at developments in the PC industry as an example. Though the computer industry moves much faster than the data storage industry, both are highly competitive and the hot item on one day might not be the hot item a few months later.

So is now a good time to invest in Exabyte?

“It all depends on how they execute and on how the competition executes,” says Paul Fox, a financial analyst with the San Francisco-based Banc of America Securities.

No one really knows what the future might have in store. Quantum, based in Boulder, is working on digital linear tape (DLT) technology with transfer rates in the 10 megabyte per second range compared to Exabyte’s 12. IBM, Hewlett Packard and Seagate, all of which have operations in Colorado, are working together on linear tape open (LTO) technology with transfer rates somewhere in the 10 to 15 megabyte per second range and storage capacity of about 100 gigabytes.

Though the technology has different names, all are tape storage systems, and each serves similar market segments. Abraham says data storage companies typically buy each other’s products, integrate them and resell them as part of their own systems.

Despite the competition, Smith says people will gravitate toward Exabyte’s offerings because “the Mammoth 2 costs will be significantly below the competitive offerings. We will have typically the same type of transfer rate or a little higher at a much lower cost.”

Exabyte expects to release the Mammoth 2 late this year. But it might be a bumpy ride. Exabyte has been pretty clear on when it will bring products to market and what the product will be able to do. Its competition, however, has not and might decide to up its offerings once Exabyte’s product is available.

Still, the first company to release a product will benefit – at least for a time.

“The perceived market leader gets a lot of points,” Abraham explains. “It’s very important to really have the perception of being the technology leader in this industry because your stock goes up, the press loves you, that whole thing. But those things are always temporary.

“Who knows when, it might be months, it might be a year … where Exabyte could enjoy that sunshine, that lead position, but when the other guys introduce new technology, it may eclipse Exabyte.”