Quantum Makes Bid for Midrange DLT Markets

In late May, Quantum Corp. (Milpitas, Calif., www.quantum.com), the fourth largest manufacturer of hard disk drives, acquired ATL Products Inc. (Irvine, Calif., www.atlp.com), a manufacturer of DLT tape libraries for midrange market segments. The acquisition was seen by analysts as a move on Quantum's part to broaden its presence in the DLT library market.

The acquisition deal must first be approved by ATL's stockholders in September.

Quantum originally acquired the rights to the DLT format developed by Digital Equipment Corp in 1994. At the time, total revenue from DLT sales was in the neighborhood of $150 million.

A lot has changed since then, and as the most popular archival storage solution for most midrange implementations, DLT demand is growing rapidly. Quantum's revenue from sales and/or licensing of DLT drives used by ATL and competitors such as Storage Technology Corp. (Louisville, Colo., www.storagetek.com) increased nearly tenfold, to $1.2 billion in 1997. Because Quantum sells primarily standalone tape drives and some smaller low-end tape libraries, the ATL acquisition will likely serve to bolster Quantum's presence in midrange accounts.

Under the terms of the proposed acquisition, Quantum's existing DLT libraries and autoloaders would be integrated into the ATL product line, to be sold under the new name "ATL, a Quantum Company." "We're going to be actually inheriting Quantum's autoloaders and lower-end automated tape products, which are called DLT store," acknowledges Scott Harlin, a public relations manager with ATL.

According to Harlin, the acquisition was prompted by a common desire on the part of both companies to leverage present and future technologies in a rapidly growing DLT marketplace. "Both companies have a vision of creating new technologies for the future in the storage systems area, and independently it would probably be a lot harder to do that," Harlin explains. "Jointly, it would be a lot easier to do that, and certainly from our standpoint being backed by a $5.8 billion company provides us with some luxury."

The combination will give Quantum/ATL 15 percent of the DLT marketplace. Harlin says that the incredible growth of the DLT marketplace itself enough to offset any uneasiness that Quantum competitors -- all of whom license the DLT technology from Quantum -- might be experiencing. "The market is growing so rapidly, and it's happening at both the lower end and at the higher end, that there's really a lot of opportunities for everybody to create new technologies and make money," Harlin affirms.