Overland Preps More Low-End Tape

Overland Storage, which reported a second quarter loss today, hopes to turn its fortunes around with the imminent launch of a new low-end tape library. (See Overland Reports Q2 Loss and 2005 Top Ten: On the Hot Seat.)

Speaking on a conference call earlier, Overland CEO Chris Calisi promised that the new platform will provide the densest libraries at the lowest price points in the industry.” These will complement Overland’s existing NEO family of tape libraries and will launch this quarter.

Overland is emerging from a turbulent few months that have been marked by the loss of a key OEM deal with its main partner HP and a hostile acquisition attempt by rival vendor ADIC. (See Overland Loses HP OEM Deal, ADIC Courts Overland, and Overland Rejects ADIC Offer.) But the new library, code-named "Dreadnought," is not only key to the firm’s future plans, but it forms the cornerstone of a major new OEM partnership, which is said to involve Dell. (See Overland Grabs New Partner.)

Overland is keeping the pricing specifics close to its chest for the time being. But Jeff Mery, enterprise storage and data center manager at Austin, Texas-based National Instruments National Instruments warns that the price tag will be absolutely critical, particularly in remote offices. “A branch office doesn’t have the budget that you have in the corporate HQ, so cost is particularly important,” he says.

Mery told Byte and Switch that he uses low-end Overland NEO tape libraries in his own branch offices, although he admits that price is an issue. “Nobody likes to buy tape. If you have a branch office with only 12 people, it can be difficult to justify spending money on a tape library.”The list price for Overland's low-end NEO 2000 with a single LTO2 drive is $9,788. Brian Garrett, an analyst at the Enterprise Strategy Group, warns that the vendor will have to go much lower with its new Dreadnoughts. “In the really low-end markets users compare the cost of the storage to the cost of their server. It’s a psychological barrier.

”So if a typical branch office server costs in the region of $3,000 to $5,000, then [the tape library] should not be outrageously higher than that,” adds the analyst.

An additional pricing pressure is the advent of Wide Area File Services (WAFS) technology, which is growing in popularity amongst users looking to cut down on remote office hardware. (See UK Firm Drills Down With WAFS and WAFS Goes Into Orbital.)

Garrett told Byte and Switch that WAFS devices typically list for $10,000, although this figure is coming down. Earlier this week, for example, WAFS vendor Tacit Networks launched a new low-end device -- the Ishared Mini -- priced at $4,000.

On this morning’s call, Overland attempted to paint a rosy picture of the firm’s future prospects, with Calisi predicting a return to profitability in the first quarter of fiscal 2007.The exec reiterated his intention to take on NetApp as a primary storage vendor, pitting his firm’s REO disk-based product against NetApp's low-end disk line. “I have got in trouble for saying that before, but I will say it again.”

In trading today, Overland shares fell 44 cents (4.66 percent) to $9.00.

— James Rogers, Senior Editor, Byte and Switch

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