Tape Drive Industry Continues to Confound Skeptics as Revenues Continue to Grow.

SANTA BARBARA, Calif.--(BUSINESS WIRE)--May 10, 1999--

The death of the tape industry has been erroneously predicted on a number of occasions.

Numerous products, including magneto-optical drives, removable disk drives, and the new hybrid magnetic optical drives, have been introduced to take away tape's crown as the king of backup and archival; but tape has proven itself to be a resilient champion. Although shipments of tape drives were down in 1998 and will continue to decline in the future, tape drive revenues are growing as demand for the higher-priced mid-range and enterprise drives skyrockets.

Contrast this supply-demand equation with the one that currently exists in the disk drive industry where shipment numbers regularly reach record levels at the same time red ink flows from a number of the drive manufacturers' income statements.

When looking at the overall health of the two markets, it is easy to understand why Quantum recently created separate tracking stocks for the hard disk drive and tape drive divisions. While Quantum's disk drive division has struggled, the tape business has turned into a profit-making machine.

DLT drive shipments topped 400,000 units in 1998 and will continue to grow in 1999, but more importantly, revenue grew to more than $900 million in 1998, and is expected to reach $1.5 billion in the year 2000.

Although DLT has been the big success story in tape over the last few years, it will have to take on a number of new competitors in 1999. This year will see the debuts of Mammoth 2, AIT-2, DDS-4, Ecrix VXA-1, Magstar 359OE, and the LTO drives. Each of these drives will compete with the DLT line in markets ranging from the bottom of the mid-range market on up through the enterprise market.

So what is driving all this activity in the mid-range and enterprise markets? The emergence of Network Attached Storage (NAS) and Storage Area Networks (SAN) has been a boon to the tape drive industry. Baking up data is now an accepted practice in network as well as enterprise environments. As the value of information technology (IT) becomes clearer, so does the need to backup this data.

Tape drive manufacturers have adapted to the growing demands of IT professionals by increasing the technological content contained within the drives. Before becoming the ubiquitous standard in disk drives, MR head technology made its debut in the 3490 tape drives from IBM. MR heads are now becoming commonplace in numerous tape products replacing the older brass and ferrite heads of previous tape drives.

As the use of MR heads has become more predominant, media suppliers have been forced to adapt new technologies such as metal particle tape to increase coercivity levels. These trends look to continue as new advanced drives such as Mammoth 2, SuperDLT, and the LTO drives hit the market.

The 1999 Tape Drive Head/Media Market and Technology Report reprises the events of 1998 and forecasts the markets for drives, media, and tape heads through the year 2002. The key numbers for drives in 1998 included shipments of 4.5 million drives generating revenues reaching $3.5 billion on an if sold OEM basis. Revenues on an if sold OEM basis should reach $5.2 billion by the year 2002. -0-

Forecast For Tape Drive Market
                                  1998        2002
Shipments (millions)               4.5         3.3
Revenue (billions)                 3.5         5.2

Peripheral Research Corp. will release the 1999 Tape Drive Head/Media Market and Technology Report, authored by Toren Ajk and Dennis Waid, on May 11. In addition to forecasts for the tape drive, head, and media markets through the year 2002, the report includes reviews of the current tape drives and their respective roadmaps as well as an analysis of the future technological trends in heads and media.

A list of company profiles and contact information for the leading tape drive, head, and media suppliers is also included in the report.

Peripheral Research is one of the leading marketing research firms specializing in the data storage industry. A copy of the report is available for $775. An executive summary and table of contents are available on request.

Peripheral Research can be contacted at 805/563-9720 or requests may be submitted by fax at 805/563-6020. The company profile can be found at www.slicom.com/~prc.