Posted on 05/03/2006 12:57:02 PM PDT by nickcarraway
Quantum plans to acquire Advanced Digital Information Corp. (ADIC) for about $770 million.
With the acquisition, unveiled Tuesday, Quantum would become the third-largest tape automation vendor after Sun Microsystems and IBM, according to research firm Freeman Reports. San Jose, Calif.-based Quantum said it expects the transaction to close in three or four months.
The deal is the latest acquisition Quantum has made in the tape industry. In October 2004, Quantum acquired Certance, a maker of LTO tape drives that competed directly with Quantum's DLT-format tape drives, making Quantum a manufacturer of both formats. And two years earlier, Quantum expanded its entry-level tape drive and library business with the acquisition of Benchmark Storage Innovations.
In the wake of those acquisitions, Quantum had to overcome development and operations issues, said Rob Pickell, vice president of marketing for the vendor. "In the last 12 months, we've put in place a single development team and rationalized our product lines," he said. "ADIC lets us continue to be a significant player in tape and better work with the broader storage market."
ADIC has had to deal with some acquisition-related issues of its own. Last fall, the Redmond, Wash.-based company launched a hostile bid to acquire Overland Storage but was thwarted, despite Overland's pending loss of major OEM customer Hewlett-Packard. Currently, ADIC is in the process of acquiring Rocksoft, a developer of software that eliminates redundant data for more efficient use of storage capacity.
Greg Knieriemen, vice president of marketing at Chi, a Cleveland-based solution provider that partners with Quantum, ADIC, and Overland in the tape library space, called Quantums acquisition of ADIC great news for the industry.
"There is some consolidation that needs to take place," Knieriemen said. "But my friends at Overland aren't going to be tickled to hear that."
The markets for data storage tape and data protection have continued to consolidate. Quantum's acquisition of ADIC comes about a year after Sun became the largest tape-library vendor with its acquisition of StorageTek.
Quantum has traditionally done well in the channel and OEM storage business, but not as well in the enterprise tape library business, Pickell said. ADIC, on the other hand, has sharpened its focus on the enterprise in the past few years, making the companies' product lines complementary, he said.
Though theres some product overlap, Quantum and ADIC are in the early part of their product life cycles, Pickell said. As a result, Quantum will try to keep both product lines in different market segments, similar to the way it segmented the market when it purchased Benchmark. "Doing it that way, we were able to achieve more than if we promote the acquisition as a cost-cutting measure," he said. Quantum is strong in the volume channel with about 5,000 solution providers, and the company has a limited channel business in the enterprise supported by a small group of field engineers, according to Pickell. ADIC has invested heavily in the enterprise channel, which gives Quantum a stronger channel presence, he said.
Still, Michael Fanelli, western regional manager at SSI hubcity, a Metuchen, N.J.-based Quantum solution provider, said Quantums ADIC acquisition likely will have channel issues.
"There will be overlaps where ADIC resellers and Quantum resellers--who before were talking two different technologies--are now talking the same company," Fanelli said. "So all of a sudden, both offer the same business with the same company."
Fanelli also dismissed the notion that theres little overlap between the Quantum and ADIC product lines, especially Quantum's latest libraries. "With Quantum's new PX500 and PX700 series, I was thinking they were going after the enterprise," he said. "Well, I guess I was wrong."
But maybe he wasnt wrong. Quantum describes its PX720 as having a "flexible architecture for data center environments" and its PX510 as "enterprise-class tape automation."
Chi's Knieriemen agreed theres more overlap that Quantum admits, which doesnt leave a lot of growth opportunity for the combined company. "It creates new opportunities for Overland and other tape library vendors," he said. "One plus one does not always equal two. This is a growing business. If Quantum and ADIC can't grow their total business, this leaves room for others like Overland."
Bob Abraham, president of Freeman Reports, said the Quantum/ADIC is strong in the tape-automation and data-protection arenas. Quantum brings its upcoming tape-encryption technology and its disk-based backup array technology to the table, while ADIC offers virtual tape technology and--with its pending acquisition of Rocksoft--technology to eliminate duplicate files to free up storage capacity.
"They complement each other," Abraham said. "They don't compete so much. Together, they have a very broad appeal and fill in a lot of holes."
ping
I think they had some hard drives awhile ago called the "fireball" I never owned one but at the time they were recieving good reviews.(that was a long time ago)
I have. I just replaced a Quantum Fireball in one of my PCs. That thing sounded like there was a little guy inside my PC with a jack hammer working on the motherboard every time I booted up or loaded a large file.
I replaced it with a Maxtor Fireball 3 and that drive is so quiet I can't hear it running or accessing even when I have my ear up to the side of the PC. No lie.
I would have replaced it with a Seagate or Western Digital. :)
I've tried Seagates too. They're ok but I'm a Maxtor fan from way back. Never had a lick of trouble with any Maxtor I've owned...and I've had all types...from 500Mb SCSI drives up to 120Gb externals. I love Maxtor and will be sad if their quality drops after Seagate absorbs them.
I think if I needed to "acquire ADIC" I wouldn't be talking about it so publicly. < rimshot >
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