A new study released by Freeman Reports cautiously projects a slow but steady recovery from two consecutive years of decline for the compact tape industry. “The fundamentals supporting this conclusion are sound, and include strong growth in network storage requirements, surprising resilience in the entry server segment, continuing performance and capacity enhancements, and accompanying cost declines in every tape technology,” declares Robert C. Abraham, author of the new edition of the Freeman Report: “Compact Tape Outlook.”
Major shifts between tape technologies are predicted as the trend toward network storage accelerates, resulting in the centralization of tape and driving the need for high-end super drives, including SDLT, LTO Ultrium, S-AIT, and new generations of 8-millimeter products. The super drive segment comprised 6% of unit shipments and 28% of revenues in 2001, and will comprise nearly 60% of unit shipments and 80% of compact tape revenue by 2007.
The report shows that unit shipments of compact tape drives decreased by 14% in 2001. This decline follows a 31% decline the previous year and affected every tape technology except LTO. LTO drive shipments — which started more than six months earlier than SDLT shipments — jumped to 92,000 units in 2001, twice the number of arch-rival SDLT drives. Both super drive categories will experience significant growth, with SDLT narrowing the gap each year. The desktop and entry level server segments, served primarily by Travan, Tandberg SLR, and DAT drives tallied 1.9 million devices in 2001, down from 2.3 million in 2000 and 3.7 million in 1999 which was a banner year. “The declines in these sectors underscore the paradigm shift from desktop backup to network backup. The combined network-oriented backup devices such as DLT, 8-millimeter, and LTO experienced only modest declines,” says Abraham. “Within the network storage space, LTO was the biggest success story in 2001, making significant gains against all competing tape technologies.”
Combined revenue for all classes of compact tape drives declined at a slightly higher rate than units, falling from $2.12 billion at OEM levels in 2000 to $1.78 billion in 2001. Revenue was down in every category except LTO, which showed a whopping 280% gain. Industry revenue will rise to $1.95 billion in 2002 with increases in every category except DAT and IBM’s Magstar MP, the only technologies without future product enhancements planned. According to Abraham, “The shift in product mix from desktop and low-cost drives to higher-priced network-oriented devices will continue. Excellent growth opportunities for high-end tape drives exist due to the growing need posed by network storage. And despite the continuing squeeze in the low-end tape market, opportunities exist for these products as well.” Total industry revenue will rise to $2.64 billion in 2007, a compound rate of growth of 7%.
Despite a decline in revenue from its DLT tape drives in 2001, Quantum continued to be the overall compact tape market leader, maintaining a revenue share of 29% — down from 38% the previous year. On the basis of strong LTO sales, Hewlett-Packard strengthened its number two ranking in 2001 with an 22% share, up 4% from the previous year. Seagate gained 4% points on moderately strong Travan, DAT, and LTO sales to grab a 15% share and move up to third place in 2001. Sony dropped 5 points to an 11% share and fourth place due to declining DAT and 8-millimeter sales. IBM doubled their share to 8% on the strength of LTO sales. Benchmark took a 5% share and sixth place, and Exabyte and Tandberg each had 4% shares. “The winners moved swiftly and decisively with new product introductions. Time-to-market proved to be a critical factor for market success,” asserts Abraham.