Spectra Logic: Taking Tape To Infinity
November 24, 2009
Many would agree with the following assertions: the IT hardware business is not a good one to be in especially during trying economic times; tape is dead; and only large vendors can be successful in the enterprise-class space, especially at the very high-end. Spectra Logic is a counter example to the first two assertions and, as we will see, is very likely to be a counter example to the third.
Although this story is about Spectra Logic's entry into the high-end enterprise-class tape library market, the broader story is really about how understanding the market dynamics well and then bringing to bear the necessary management and engineering disciplines can result in product innovations that meet even the most stringent customer needs. Capitalism rewards those who understand this dynamic and penalizes those who do not.
And Spectra Logic has been successful in delivering tape solutions, primarily tape library products, which have met enterprise needs for 30 years. They are a hardware company that is also self-funded and manages to grow while remaining debt-free by design. That means the company can do what it feels is in the best interest of the business and its customers without an overemphasis on quarterly results.
The company has been consistently profitable, establishing a track record that should be reassuring to customers. Although the standard caveat that past results are no predictor of future results applies here, customers want to work with a vendor who is economically sound. All in all, Spectra Logic defies conventional wisdom that hardware is a bad business and tape is dead.
Note that Spectra Logic's history of success is remarkable --although by no means unique -- for a high technology company. Thirty years is a long time in the history of IT. Market trends have changed many times and business models must have been modified many times to adjust to those trend changes (see Digital Equipment Corporation as just one example of what happens when a successful company is unable to change). Spectra Logic has consistently been able to evolve successfully. For example, while it once used Sony tape technology exclusively as a marketing differentiator, it transitioned to supporting LTO tape technology when customers and the market demanded.