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Is StorageTek discouraging DLT buys?

Rumblings of a feud with Quantum over DLT tape patents could lead StorageTek to nudge users toward the LTO format.

Sources tell that Louisville, Colo.-based StorageTek is no longer paying commissions to its salespeople for DLT and Super DLT (SDLT) drive sales. This change may well lead StorageTek salespeople to push LTO drives when selling libraries, since salespeople do get commissions for those sales.

Even if a StorageTek salesperson sells a library packed with 10 SDLT drives, the source said, that salesperson would only receive a commission on the library portion of that sale -- not the drives.

StorageTek would not comment directly on its internal sales practices. Rather, it maintained that the company continues to offer DLT and SDLT technology, as well as LTO.

"StorageTek continues to provide customers with the broadest selection of tape technology and vendor selections in the industry," a company spokesman said. "It is not StorageTek's policy to publicly divulge the compensation policies of its sales organization."

Still, StorageTek has made no secret of its affinity for LTO. In a recent conference call to discuss the company's annual earnings, Patrick J. Martin, StorageTek's president and CEO, noted the success of the company's LTO products. He made no mention of DLT.

The tape-patent battle
In April 2003, Quantum Corp. went on the offensive by filing a patent infringement lawsuit against StorageTek in U.S. district court alleging that StorageTek unlawfully manufactured and sold tape products that infringe on two separate Quantum patents.

StorageTek fired back on the same day with a complaint of its own. StorageTek filed suit in a U.S. district court in Denver, claiming that Quantum was illegally manufacturing and selling DLT technology based on StorageTek's patents. StorageTek sought an injunction against the future sale of Quantum Super DLT products.

"We had a very strong fourth quarter. Our open tape [products], in particular LTO, showed very, very strong performance," he said. Martin added that StorageTek is happy with its tape sales "across the board" and that his company plans to be very aggressive with its existing product portfolio.

If StorageTek is tilting toward LTO, that shift may result from pressure over the legal battle between Quantum and StorageTek. The vendors filed lawsuits against each other last April over the rights to sell and manufacture SDLT and DLT products.

Quantum, San Jose, Calif., denied that any feud exists -- despite the pending patent suits. Steve Berens, Quantum's senior director of product marketing and strategy, said there has been no change in his company's relationship with StorageTek.

"They continue to a valued partner and are currently in qualification with plans to ship the SDLT 600, which is another example of their commitment to support their customers, who demand the industry's highest-performing tape drive," he said.

The consensus among analysts and vendors alike is that DLT tape is still very much alive, but vendors are experiencing greater success with LTO in enterprise data centers.

Bob Abraham, head of the Ojai, Calif.-based analysis firm Freeman Reports, said he doubts that StorageTek would squash its sales of DLT and SDLT, but anything is possible.

"They can do anything internally. They may want to discourage [DLT sales], but I would be surprised if they did," he said. "They have an enormous installed base of DLT and SDLT users."

Abraham said that, even if StorageTek's ultimate goal were to shift its users to LTO, doing so would take a long time. Still, such a shift would not be without precedent. IBM was selling DLT drives in its tape library products until LTO came on the scene.

"IBM's DLT business did shift down in favor of LTO going up," Abraham said. "They did, in fact, discontinue DLT. That's not amazing, since IBM is the champion of LTO. But StorageTek is technology-neutral. As long as they have customers willing to buy DLT, it does not behoove them to discontinue it."

Let us know what you think about the story; e-mail: Kevin Komiega, news editor.

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