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Quantum sputters, looks to new DXi launch for lift

Quantum has a lot riding on its new DXi Accent deduplication software and DXi6701 and 6702 backup appliances that launched Wednesday.

During the vendor’s earnings conference call Wednesday night, executives made it clear they are counting on the new midrange releases to revitalize its slumping disk backup business. Quantum’s disk and software revenues dropped last quarter, causing it to fall short of overall revenue forecasts.

Quantum added client-side dedupe with DXi Accent, and increased the scalability and connectivity options of its midrange appliances. Quantum CEO Jon Gacek said he is optimistic that these improvements will make the DXi platform more competitive with EMC’s Data Domain.

“With the changes we made, it’s a damn good product,” he said in an interview with Storage Soup. “If my sales team can’t sell this, I’ve got big problems.”

This isn’t the first time Quantum has revamped its disk backup products. Quantum refreshed its entire DXi hardware line following a rocky start that included an OEM deal with EMC that was terminated in 2009. It also rolled out DXi 2.0 software in March. But that didn’t do the trick.

Quantum’s total revenue last quarter was $153.5 million, below its $160 million forecast. Disk and software revenue – the DXi and StorNext platforms – came in at $27.6 million, down from $34.7 million the previous year. DXi revenue reached only 70% of the vendor’s internal plans, with the biggest shortfall on the DXi 6000 midrange platform.

Gacek said part of the sales slump came because Quantum rolled out DXi 2.0 software on the 6500 system but not on the 6700, causing confusion for his sales team and channel partners. Now Quantum is collapsing five 6500 and 6700 midrange configurations into two, and the 6701 can be upgraded in the field to the 6702. However, Quantum is bringing out its new DXi Accent software in phases – it is not expected to be available on the enterprise DXi8500 platform until late this year.

“I’d like to have it on 8500 as well, but we have to make some tradeoffs,” Gacek said.

Quantum is looking for the new releases to bring it into more deals with Data Domain. Gacek said when Quantum runs into Data Domain now, EMC will drop its price to win the deal.

“They dismiss our technology as being inadequate, yet they’re fighting so hard when we’re in deals with them,” he said. “I don’t think they price like that when we’re not in deals. We need to get in front of more customers.”

He said Quantum’s DXi win rate last quarter dropped to 45% from 55% the previous quarter.

Revenue from Quantum’s StorNext file archiving software also declined , taking a nine percent drop over last year. Quantum is counting on a recently signed reseller deal with NetApp and a new StorNext appliance for rich media customers to spark sales of that product.

Quantum’s tape automation business did grow eight percent over last year. “Tape is far from dead,” Gacek said on the earnings call.

Overall, Gacek said “We are not pleased with our revenue” in the first quarter of its fiscal year. “This start puts us a little behind for the year, but we plan to make it up.”

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