Tape's Tally Is Up

IBM reports a 19 percent increase in storage tape gear, while disk is flat

July 20, 2007

2 Min Read
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3:38 PM -- IBM reported storage growth of 6 percent during its second-quarter earnings call last night, a welcome change from last quarter's 9 percent decline. (See IBM Storage Earnings Up.) And guess which segment of storage grew the most? Tape.

Big Blue's tape revenues grew 19 percent, compared with disk-related revenues, which stayed flat as a pancake. Well, that's not quite accurate: Revenues in disk were up 2 percent, but adjusted for currency, they stayed flat. (As a Canadian resident working for an international outfit, I can attest to the need to adjust for currency, especially on expense reports!)

In dollar amounts, IBM's Systems and Technology segment, which sells the company's tape storage gear, posted $5.1 billion in revenue overall, about 21 percent of IBM's $23.9 billion overall quarterly revenue.

I don't know about you, but to me that's big bucks, and big growth, for a segment with technology that's supposed to be in the tank. Is IBM's tape story unique?

Quantum posted $119 million in tape automation revenues for its quarter ended in March 2007, compared with $79 million in the previous year's quarter. In contrast, HP cited tape declines when on May 16 that company reported $44.6 billion quarterly revenue in enterprise storage and servers, an 8 percent year-on-year increase."IBM's generally been showing pretty strong growth in tape drives and automation, especially in proprietary enterprise technologies," says analyst Robert Amatruda of IDC. While long term, tape storage revenues are destined downward, there's still growth in automated LTO libraries, he notes, specifically in midrange models that back up groups of rack servers.

IDC sizes the worldwide revenue in branded tape products (ones not OEM'd) to be about $4.1 billion annually, not counting media.

Again, big bucks. But another expert, W. Curtis Preston of Glasshouse Technologies, says there's no arguing that more IT pros are turning to disk for backup than ever before.

Preston says IBM's tape growth figure "says more about how IBM is doing in the tape market than about the tape market itself." IBM has done well in tape, he notes, and it was first to market with LTO-4 products. That said, many firms don't have the money to shell out on an all-disk solution -- yet. So tape remains entrenched, warts and all.

But time is ticking, Preston asserts. "Almost nobody is saying, 'Tell me about LTO-4 and hardware encryption in the tape drive.' Myriad clients are saying, 'Tell me about de-duplication. Is it true it will enable me to purchase a VTL?' "Bottom line? Don't count those VTLs before they're hatched, and don't underestimate the ongoing influence of tape backup in enterprise data centers.

Mary Jander, Site Editor, Byte and Switch

  • GlassHouse Technologies Inc.

  • Hewlett-Packard Co. (NYSE: HPQ)

  • IBM Corp. (NYSE: IBM)

  • IDC

  • Quantum Corp.

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