$770 Million Acquisition Marks the Dawning Of A New Quantum

That's the message that Rick Belluzzo, chairman and CEO of Quantum, and other executives want its channel to understand as the "new" Quantum triples the number of direct sales representatives dedicated to working with partners while looking to recruit 1,000 or more new partners worldwide.

Belluzzo, in some of his first public comments about the $770 million acquisition since the agreement was signed last month, told solution providers that late last year he looked at the storage business and saw how system vendors such as Hewlett-Packard and IBM have come to dominate the backup, restore and archiving business, a trend reinforced by Sun's acquisition of StorageTek.

"I didn't want Quantum to be seen only as a focus for OEMs to cut their expenses," Belluzzo said. "I wanted to make sure Quantum controls our own market and destiny and to take leadership of this market with the 'departure' of StorageTek. The acquisition by Sun marginalized StorageTek."

San Jose, Calif.-based Quantum's move last month to acquire ADIC for $770 million is about focusing on the backup, restore and archiving business from both the hardware and software sides, Belluzzo said. "It's about open systems, not about HP-UX or Solaris," he said. "It's about building a large independent solution supplier." A larger independent storage vendor also can take better advantage of potential acquisitions, Belluzzo said.

"If you don't have a strong go-to-market footprint, those transactions are hard to get forward because we may get some new technology but ultimately we can't put it in a form that expands the opportunity," he said.

The importance of having an independent leader in this space comes from the ability to influence the marketplace and bring new technologies to play, Belluzzo said. Combining the two companies also improves their ability to innovate for future growth and have the financial ability to compete as a really strong independent storage player, he said.

"We didn't want to be in a position where, if we had a new idea or technology, we have to go to the OEM and say, 'Please, please, please, please try this,' " he said.

Solution providers agreed that the new Quantum will have a much stronger say about future technology directions, especially in the secondary storage space. Michael Pearce, vice president of sales at OptiStor Technologies, a Bellevue, Wash.-based solution provider, said Quantum is smart to leverage its new-found power in order to be in the forefront of upcoming new technologies.

"For instance, customer executives and boards are asking about security," Pearce said. "You don't need too many 'Veterans Administration lost 300,000 records' headlines. IT will have to respond. And a vendor either will lead the technology, or it will be mandated."

As another example of those new technologies, Pearce pointed to Rocksoft, a software developer acquired by ADIC in March. Rocksoft technology allows the elimination of duplicate data during the backup process, greatly compressing that data to improve backup performance.

"Rocksoft is a powerful technology," Pearce said. "It will take the tape library from the trailing edge of the deal to the front. It hits real customer pain points. If Quantum can implement and integrate technology like that fast enough, it will be terrific."

Rich Baldwin, president and CEO of San Diego-based Nth Generation, said that the acquisition makes it easier for customers to look to Quantum as a top supplier for secondary storage and an alternate to system vendors such as HP, IBM and Sun. "Customers naturally want a choice," he said.

Rob Pickell, vice president of worldwide marketing at Quantum, said that for the rest of 2006, Quantum will take advantage of the ADIC acquisition to push hard on developing a strong portfolio of backup, restore and archive products to complement its tape business. "One of the areas that we're most excited about is the ability to very aggressively move forward in our non-tape portfolio," Pickell said. "Being able to expand our backup and recovery and archiving solutions outside of our core tape business. This is an area where we think the ADIC/Quantum intellectual property, engineering resources, services infrastructure will be extremely synergistic. The goal is to be able to develop an overall code base portfolio that allows us to build on our core backup and recovery tape business into new solutions areas like disaster recovery, operational recovery and compliance and retrieval."