High Performance Tape Shipments Soften, But Renewed Growth Lies Ahead.

SANTA BARBARA, Calif.--(BUSINESS WIRE)--June 11, 1999--

Performance Tape Outlook, just released by Freeman Associates, reports diminished demand for high-end tape drives through 2000 before growth resumes.

Robert C. Abraham and Raymond C. Freeman Jr., authors of the market analysis, state that production limitations and the failure to bring new products to market on time contributed to annual decreases in drive shipments since 1996. "The arrival of Ultrium products in 2000, however, should re-ignite market growth," stated the authors.

Industry shipments for all classes of high performance tape drives, including half-inch cartridge, half-inch reel, half-inch helical, and 19-millimeter technologies, will increase to 74,900 units in 2003, a 3% compounded annual rate of growth from the 63,700 units shipped in 1998.

The authors predict, however, that combined revenue from these products, expressed at OEM levels, will decrease from $1,081 million in 1998 to $927 million in 2003, equivalent to a 3% annual rate of decline.

"The shift to storage area networks places new demands on secondary storage," reported Freeman. "High performance tape drives respond well to the need for fast, cost-effective storage of large amounts of data. Costs of tape drives and media will continue to decline, though, contributing to a gradual decrease in overall revenue throughout our forecast period."

Half-Inch Cartridge Levels Robust

Shipments of Magstar and StorageTek 9840 drives are on the rise, portending a healthy future for half-inch cartridge technology. According to Abraham: "The majority of half-inch cartridge drive shipments will remain 36-track 3490-equivalent through 1999. Shipments of 18-track units have become negligible."

SCSI interface units, typically cost reduced by less robust mechanisms, are used in mid-range open system environments for interchange, archiving and disk backup.

Meanwhile, upper-end StorageTek 9840, Magstar and Magstar-compatible, and Plasmon NCTP drives offer migration paths to higher performance for mainframe users, and the advent of Ultrium products indicates a continuing upward thrust for half-inch technology. Abraham reported: "Market acceptance of these drives is reinforced by the high degree of media automation provided."

The report forecasts shipment growth for all classes of half-inch cartridge drives from 52,900 in 1998 to 73,400 in 2003, a composite annual increase of 7%. Revenue will be relatively flat, drifting from $879 million in 1998 to $870 million in 2003.

Half-Inch Reel Technology Nearing End of Life

"Demand for half-inch reel drives is waning quickly and will disappear in 2000, one year later than previously forecast," stated the authors of the report. Combined shipments of reel drives are projected to decrease from 13,700 units in 1997 and 8,600 units in 1998 to 1,200 units in 2000.

Meanwhile, total OEM-level revenue for reel drives will decline from $65 million in 1997 and $41 million in 1998 to $6 million in 2000. Freeman reported that PE drives are at end of life; GCR drives will account for remaining shipments.

Helical Scan Takes a Downturn

Helical scan data drives -- both half-inch and 19-millimeter -- formerly observed as the "bright spot" in an otherwise lackluster high-performance marketplace, face continuing softness in demand.

Delays in the availability of Sony's DTF-2 drives and the popularity of StorageTek's linear 9840 drive, coupled with expected availability of Ultrium and Super DLT products, will cut into future deliveries of StorageTek's Redwood and Sony's DTF drives. The authors note a decrease in shipments of high-performance helical scan drives for data uses from 2,200 units in 1998 to 1,500 units in 2003, a 7% rate of decline.

OEM-level revenues will likewise deflate from $161 million in 1998 to $57 million in 2003. The authors contend that this class is impeded from growth due to strong competition from other high capacity technologies. Relatively high product pricing and sole sources of supply for each offered product type add to the issues already facing helical scan drives.

Report Analyzes 17 Manufacturers, 65 Drive and Autoloader Models

Performance Tape Outlook presents an in-depth analysis of the markets and detailed forecasts of worldwide shipments and revenues for seven classes of high-performance tape drives from 1997 through 2003. Specifications are given for 65 models of drives, some of them including autoloader options, from 17 manufacturers, and also for 76 representative tape software products from 32 software manufacturers.

Expected technology shifts and future product directions are identified. The report is reinforced by 23 illustrations and 38 tables to highlight key findings. The study is updated annually and is oriented to issues and opportunities in this fast-changing market.

The fact-filled 154-page volume is available from Freeman Associates Inc., 311 East Carrillo St., Santa Barbara, Calif. 93101, 805/963-3853, at a price of $2,395. Additional copies for the use of the same buyer are priced at $270 each.

Freeman Associates also publishes analyses of other data storage markets, including Compact Tape Outlook, Tape Library Outlook, Optical Storage Outlook, and Optical Library Outlook. Further information is available at www.freemaninc.com. -0-

                     WORLDWIDE MARKET PROJECTIONS
                        PERFORMANCE TAPE DRIVES

UNIT SHIPMENTS (THOUSANDS)

                         1997        1998        2003

   HALF-INCH             49.9        52.9        73.4
   CARTRIDGE

   HALF-INCH REEL        13.7         8.6         0.0

   HELICAL SCAN           2.3         2.2         1.5


TOTAL UNITS              65.9        63.7        74.9

REVENUE ($ MILLION, OEM LEVEL)

                         1997        1998        2003

   HALF-INCH              852         879         870
   CARTRIDGE

   HALF-INCH REEL          65          41           0

   HELICAL SCAN           170         161          57


TOTAL REVENUE           1,087       1,081         927

Copyright 1999 by Freeman Associates Inc.