Exabyte, Ecrix to Merge

Posted on September 12, 2001

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By HEIDI BIGGAR

The announcement that Boulder, Colorado-based tape vendors Exabyte and Ecrix will merge by year-end may not have sent shock waves throughout the storage industry, but it did rock the tape sector. By combining resources -- and ultimately blending tape technologies -- the two companies believe they will be able to accelerate sales of Exabyte's Mammoth and Ecrix's VXA tape formats.

According to the merger agreement, Exabyte will issue 10 million shares of common stock in exchange for all outstanding equity of Ecrix. The combined company will carry the Exabyte name, though the VXA label will remain at least through the next-generation of 8mm products due out later this year.

"It's an excellent move for both companies," says Bob Abraham of Freeman Reports, a tape market research firm in Ojai, CA. The deal gives cash-strapped Exabyte a $9.4 million infusion as well as a presence in traditional DDS tape markets. In return, Ecrix gets to leverage the Exabyte name and, perhaps more importantly, the company's supply-chain partnerships and distribution channels.

"VXA brings us into the lower-end/volume part of the market -- where we have never played before," says Bill Marriner, chairman, president and CEO of Exabyte. As for competitive technologies from Seagate, Sony, Tandberg and Seagate, he contends they are either not priced right (AIT-1), don't have the market presence (SLR), or don't have adequate performance and capacity (Travan) to capture significant market share.

"The (merger gives us) the corporate infrastructure needed to service very large OEMs," explains Juan Rodriguez, Ecrix co-founder, chairman of the board, and chief executive officer. Rodriguez says that although Ecrix has the inventory to cover the company's recently signed deal with Compaq for SCSI and IDE VXA-1 drives and media through the end of the year, the merger assures continued supply in the event of a steep ramp.

Ecrix currently outsources media and drive manufacturing to Sony and Aiwa, respectively, while Exabyte uses Matsushita Electric Industrial, Sony, and TDK for media and soon Hitachi for Mammoth-2 drive manufacturing.

But perhaps the most interesting prospect to come out of the proposed merger is the idea of "blending" the two 8mm technologies (VXA and Mammoth) so that they are compatible formats. "Such a market matrix would enable users to make a move in performance without switching technologies," says Rodriguez. This compares to compatibility between Benchmark?s DLT1 and Quantum?s DLT families.

Ecrix expects to begin shipping its second-generation 80GB/6MBps VXA drive later this year, while general availability of Exabyte's third-generation 120GB/14MBps Mammoth product is slated for early next year. Read-compatibility between the two formats, should it occur, will be added after this generation. Exabyte also has plans to integrate VXA into its library/autoloader families.


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