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Quantum looks towards StorNext for a pick-me-up

With both disk and tape backup target markets stagnating, Quantum is counting on its StorNext platform for growth.

Quantum’s “scale-out storage” – StorNext file system and Lattus object storage appliances and software – increased 41 percent over last year to $18.1 million last quarter while Quantum’s total revenue of $128.1 million dropped four percent (that decline does not count a $15 million one-time royalty payment last year).

The StorNext revenue was the same as DXi disk backup appliance revenue for the quarter, and it wasn’t that long ago that DXi was considered Quantum’s best chance for rapid growth.

StorNext revenue includes part of a $3 million-plus deal with what Quantum CEO Jon Gacek called a “leading consumer electronics company” for StorNext and Lattus products for managing video workflows. Approximately half of that revenue was recognized last quarter.

Quantum added 75 new StorNext and Lattus customers. It is going after media and entertainment companies, and Gacek said it landed a $200,000-plus deal at a major studio, an international broadcaster and a follow-up sale with a TV shopping network in the quarter. Quantum is also looking to replace aging Apple Xsan systems with its StorNext Pro high performance systems for post-production studios and small broadcasters.

Quantum also increased the number of partners selling StorNext by 12 percent since last year.

The amount of time Gacek spent talking about StorNext during the Wednesday earnings call was disproportionate to its overall contribution to the company, he admitted in an interview afterwards. But he said StorNext is the Quantum platform clearly on the rise.

“Tape is still the biggest part of our business, so I get in trouble internally when I do that [talk up StorNext],” he said. “But in the world of software, cloud and unique value, StorNext is where we have the most differentiation and overall growth.”

Gacek said the StorNext 5 release that pumped up the software’s performance and scalability has been a big boost. Quantum is also looking to capitalize on the emergence of object storage, which it sells through an OEM partnership with Amplidata on its Lattus appliances.

Video storage is a big use case for StorNext and Lattus. Gacek said Quantum previously sold to all major sports leagues, and now is looking to expand to the individual teams as they use more video for scouting and in-game entertainment.

Quantum added around 90 new DXi customers in the quarter, and Gacek said it won close to 55 percent of its deals with the disk backup appliance. He hopes DXi will get a boost from the DXi6900 launched this week. The 6900 is built on StorNext 5 software and scales from 17 TB to 510 TB.

“We said we’re going to grow at the same rate as the market,” Gacek said of DXi. According to IDC’s latest purpose built backup appliance tracker, that market decreased by 2.5 percent in the first quarter of 2014 although the research firm predicts it will return to growth.

As for its bread and butter, Quantum’s branded tape automation revenue dropped nine percent and OEM tape automation – sold through partnerships with vendors including Dell, Hewlett-Packard and IBM – fell 24 percent from last year. Gacek said the branded business probably gained share despite the decline, but OEM revenue – a minority of Quantum’s tape business – has been a sore spot.

“The OEM business was not up to expectation,” Gacek said. “That has been our weakest part over the last couple of quarters. Branded business will be our share grabber.”

Quantum’s $128.1 million total revenue was above the midway point of its guidance. It projected revenue of $130 million to $135 million this quarter.

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