Quantum V. 2.0...My Meeting With Michael.

One of the high points at COMDEX for me was my meeting with Michael Brown, chairman and CEO of Quantum Corporation up in Milpitas. My desire was to ask the big question: what was going on up there with all the reorganization, merger, and whatnot? Well, my meeting with Michael made it clear that Quantum version 2.0 is off and running.

Brown related that the company had been doing a great deal of work on the value mix at Quantum; they have endured two years with no margins to speak of. In a relentless stock market, this couldn't continue. The changes started taking place.

Quantum and Seagate have been battling out supremacy in hard disk, especially in the desktop space, for many years. Imagine the widespread surprise, then, when Maxtor Corporation and Quantum announced a definitive agreement to combine Maxtor and Quantum HDD. Based on the current market capitalizations of Maxtor and Quantum HDD, the transaction is valued at approximately $2.3 billion.

To be named Maxtor Corporation, the combined company will be led by Mike Cannon, Maxtor's current president and chief executive officer. At closing, on a pro forma basis, the company will have a combined ship rate of more than 50 million hard drives annually for use in a broad range of desktop personal computers, Intel-based servers, and consumer electronics applications. In addition, Maxtor's Network Systems Group, which is currently shipping a family of network-attached storage (NAS) products under the MaxAttach brand, will be part of the combined company.

Brown went on to discuss Quantum's DLT and Storage Systems Group forming two distinct companies from its DSS businesses by making its server appliances subsidiary an independent, publicly-traded company called Snap Appliances, Inc.

Quantum will conduct an initial public offering for less than 20 percent of Snap Appliance shares. Approximately six months following the IPO, Quantum intends to distribute the balance of the shares to Quantum DSS stockholders subject to receiving, a favorable IRS ruling and board approval.

Quantum DSS will be two business groups now Enterprise Solutions and DLTtape. The Enterprise Solutions Group, building on the QuantumATL brand, will grow the company's current position beyond leadership in tape automation systems, into storage solutions supported by direct sales and service capability. Brown was very enthusiastic about the new direct sales force. The DLTape Group, building on the tape format that holds leading midrange market share, will continue to offer the popular family of tape drives that constituted the hidden gem in the DEC acquisition.

The company's Enterprise Solutions Group, comprised of ATL tape automation systems, is focused on sustaining growth in the market for mid-range and high-end library systems. The business is a leading provider of DLTtape libraries covering a full spectrum of workgroup, departmental, mid-range, and enterprise-class applications. Providing the industry's most comprehensive product family ranging from desktop to data center, ATL library systems provide high-performance, reliability, cost-effectiveness, and scalability for organizations requiring backup, archival, and recovery of business-critical computer data.

The Enterprise Solutions Group also has an established partnership with Network Appliance to deliver complete Fibre Channel and Gigabit Ethernet storage solutions. The Group will continue to work with other industry leaders, as it has with Network Appliance, Cisco, Veritas, and others in the Open Storage Networking (OSN) initiative that has been chronicled in recent months in Computer Technology Review.

The most remarkable change that Brown and I discussed was the upcoming role of Quantum's DLTtape Group in Quantum v.2.0. Quantum is now very much a tape company, that will try to continue its industry prominence for tape drives and media, while growing the business beyond the recently introduced Super DLTtape platform to include new directions such as autoloaders, branded products, and near on-line storage. What is true, though, is that the SLDT progress will be vigorously challenged. When Quantum acquired the DLT technology from DEC, Exabyte Corporation was very late to market with its Mammoth product. No such lateness exists here. Additionally, industry powerhouses IBM, Hewlett-Packard, and Seagate have finally brought LTO Ultrium to the marketplace.

Brown made good points for his company's new positioning. One thing is really certain; there has been a quantum change in Quantum Corporation. We're watching Quantum v. 2.0 with considerable interest.