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Quantum still taking its lumps

Quantum’s strategy for breaking its sales slump is to think small. That means a large steady stream of smaller deals rather than relying on a handful of big deals.

Quantum CEO Rick Belluzzo says the vendor made some large deals with its DXi7500 deduplication systems last quarter but many large deals also got pushed back because of spending issues, resulting in “lumpy” results. The bottom line is that Quantum needs to improve sales for the DXi6500 midrange and DXi4500 SMB platforms instead of relying heavily on larger DXi7500 deals in the enterprise.

“The nature of our business is big-deal oriented, and that makes us more susceptible to when people pull back,” Belluzzo said. “We look at bigger deals that we track, and very few – virtually none – are deals we lost. A lot didn’t close, but hopefully slipped into the next quarter. But our smaller deals can’t offset that because we don’t have enough of that business yet. We need a more diverse strategy.”

Quantum this week reported revenue for last quarter of $163 million, well below the $170 million to $180 million it forecasted for the quarter. The vendor lost $3 million for the quarter. “We clearly did not deliver the growth we expected,” Belluzzo said.

Belluzzo said Quantum struggled mightily in Europe and one geographic area of North America. The vendor made some realignment in its sales force, but will concentrate on pushing its DXi disk backup, StorNext software and tape library products through the channel. Quantum hopes to win partners looking for an alternative to Data Domain’s dedupe line now that EMC owns it and are frustrated with Oracle’s handling of the Sun tape platform.

It now appears unlikely that Quantum will sign any more major deduplication OEMs to replace the deal it lost with EMC after EMC bought Data Domain. Quantum did announce one OEM deal in January (believed to be Fujitsu) but is now more channel focused.

“Don’t expect any imminent changes in what we’re doing today, and that’s mostly driving branded business,” Belluzzo said. “Our disk and software and StorNext platform will have various partners and maybe OEMs associated with them, but we think we have plenty to work with.

“It was a disappointing quarter with the economy, but underlying this we are making progress around the core tenets of our strategy. That’s growing our branded business and taking advantage of channel disruption.”

A longer term goal for Quantum is to expand its data reduction capabilities beyond deduplication for backup. Primary data reduction is a hot topic with storage vendors these days and Quantum has designs on that space.

“We are driving our architecture and technology into a world where deduplication becomes more common in various tiers,” Belluzzo said. “That basically calls for the process to become more about data reduction than deduplication. We can take a stream of data that has lot of influences, and respond accordingly to get bet overall result. There is a lot of thinking and technical work underway to move our architecture into a world that is different than what we see today.”

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