Compact Tape Market Stirred by Network Storage; Shift From Desktop to Network Storage Shakes Industry.

Business Editors

OJAI, Calif.--(BUSINESS WIRE)--April 6, 2000

A new study published by Freeman Reports projects major shifts in the compact tape market as network storage requirements begin to drive this historically unglamorous industry.

SAN and NAS implementations of tape -- primarily in automated tape subsystems such as libraries and autoloaders -- will fuel rapid growth for high-end tape, while desktop requirements will gradually weaken. New tape technologies -- including Ultrium, Ecrix's VXA, Benchmark's DLT1, and OnStream's ADR -- will successfully elbow their way into an already-crowded market, slowly displacing older technologies.

The report shows that unit shipments of compact tape drives increased 5% in 1999 as the decline in shipments into the desktop environment was more than offset by the increase in shipments into small and medium networks. Worldwide demand for QIC, DAT, 8-millimeter and DLT drives tallied 4.35 million devices in 1999, up from 4.15 million in 1998.

"Substantial increases in shipment levels of DAT, DLT, and SCSI interface minicartridge drives contributed to the first rise in tape drive shipments since 1995 when shipments were dominated by desktop products such as low-end QIC minicartridges," declared Robert C. Abraham, author of the new edition of the Freeman Report: "Compact Tape Outlook."

Growth will peak at 5.16 million units in 2001, then start a decline to 3.87 million units in 2005, a compound rate of decline of 2%. "This drop reflects the paradigm shift from desktop backup to network backup, and is accompanied by a shift from desktop backup devices to larger-capacity, network-oriented backup devices," said Abraham.

Industry revenue for all classes of compact tape drives expanded at a faster pace, jumping to $2.6 billion at OEM levels in 1999, up 10% from the $2.37 billion value in 1998.

The steeper rise in revenues was driven principally by large increases in high-end DAT and DLT revenue. According to Abraham, "These increases accentuate the shift in product mix from desktop and low-cost drives to higher-priced network-oriented devices.

"Excellent growth opportunities for all categories of tape drives exist at the high-end due to the growing need posed by network storage backup. And despite the continuing squeeze on the desktop market imposed by low priced removable-disk drives such as CD-R, selected opportunities persist for low-end tape products."

The report cautions that declines in shipments of removable-media storage devices such as tape are slower than those of non-removable-media devices. Total industry revenue will peak at $3.4 billion in 2003 before declining to $3.13 billion in 2005, a compound rate of growth of 3%.

The Race for the Brass Ring Heats Up

DAT technology dominated industry revenue from 1994 though 1997, then reluctantly and barely relinquished first position to DLT in 1998. DLT will lead industry revenue each year through 2005 despite aggressive competition from DAT, Ultrium, and 8-millimeter.

Compact tape continues to exploit the demand for high capacity disk backup and archiving generated by the high volume of data in networked systems, workstations, and small computers. Emerging applications, such as e-commerce, offer the biggest opportunities to the compact tape industry.

Existing technologies such as DAT, Exabyte 8-millimeter, QIC, Quantum DLT, and Sony AIT continue to evolve toward higher capacity and performance. Emerging tape technologies and formats including Benchmark DLT1, Ecrix VXA, OnStream ADR, and Ultrium are targeting these same high-growth opportunities.

"The potpourri of choices now available make the next two to three years crucial for tape industry participants as the winners and losers will be defined and redefined," asserted Abraham. DAT, DLT, and QIC minicartridge products have successfully defended their high-end territory so far. But new choices abound now and these incumbent technologies must move even faster to stay ahead of the new challengers.

"Time-to-market will be the critical factor for future market success," said Abraham.

Report Analyzes Tape Drive and Autoloader Markets

The new Compact Tape Outlook report presents an in-depth analysis of the markets and detailed forecasts of worldwide shipments and revenues for thirteen classes of compact tape drives and four classes of related autoloaders from 1998 through 2005. Summary specifications are given for all classes of tape drives and autoloaders.

Eight-year pricing trends are analyzed, and expected technology shifts and future product directions are identified. The report is reinforced by 66 illustrations and 85 tables to highlight key findings. The study is updated annually and is oriented to issues and opportunities in this fast-changing market.

The report is available now from Freeman Reports, 12010 MacDonald Drive, Ojai, California 93023-9714, [phone], at a price of $2,995. Additional copies for the use of the same buyer are priced at $295 each. Freeman Reports also publishes analyses of other tape storage markets, including Performance Tape Outlook and Tape Library Outlook.

Forecast Summaries Attached: (Copyrighted, please credit)

                     Worldwide Market Projections
                          Compact Tape Drives

Unit Shipments (Thousands)

                          1999              2005            CAG

QIC                      1,762               591           -17%
DAT                      1,944             1,685            -2%
8-MM                       149               449            20%
MAGSTAR MP                   8                 0            N/A
DLT                        483               636             5%
ULTRIUM                      0               504

Total Units              4,346             3,865            -2%


  Installed Base        20,351            21,623


Revenue ($ Million At OEM Level)

                          1999              2005            CAG

QIC                        347               114           -17%
DAT                        974               758            -4%
8-MM                       192               595            21%
MAGSTAR MP                  39                 0            N/A
DLT                      1,046               956            -1%
ULTRIUM                      0               703

Total Revenue            2,598             3,126             3%