Tape market update: LTO’s the bright spot

Posted on July 01, 2007

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LTO libraries accounted for more than 88% of unit shipments last year, and the LTO-4 format promises to extend the technology’s dominance.

By Dave Simpson

Tape market research firm Freeman Reports recently released its annual Tape Library Outlook report-a 188-page compendium that covers virtually all aspects of the tape market-and in terms of tape formats, LTO is the only growth market.

For the first time, overall revenues and unit shipments of tape libraries declined in 2006. Total revenue was down 15.6% (to $1.81 billion) relative to 2005, and unit shipments declined 4.5% (to 57,668 units). That follows two consecutive years of revenue growth: 10.4% in 2005 and 13.5% in 2004.

However, that doesn’t mean users are buying less tape capacity. In fact, the report notes that users purchased more than 50% more tape capacity in 2006 versus 2005. The decline in revenues and unit shipments is in part due to users’ migration to lower-cost, higher- capacity libraries.

Freeman Reports expects tape library revenues to continue to slip slightly this year, although at a slower pace. The research firm predicts revenues will slide from $1.81 billion in 2006 to $1.77 billion this year (although the firm predicts a rebound leading to $2.15 billion in revenues by 2012, representing a compound annual growth rate of 2.9%).

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Meanwhile, overall unit shipments are expected to increase this year, from 57,668 units in 2006 to 60,438 units in 2007. Freeman Reports predicts a rebound in tape library shipments through 2012, with a compound annual growth rate of 5.8%.

Continued interest in tape is being fueled by a number of factors, including tape’s write-once, read-many, or WORM, capability (which is increasingly important for records retention and compliance applications), drive-level encryption (as opposed to appliance- or software-based encryption), a shift toward tiered storage strategies such as information lifecycle management (ILM), and tape’s cost-per-terabyte advantages over disk.

LTO dominates

The one bright spot in the unit shipments and revenue picture was LTO tape libraries. LTO libraries accounted for 88.4% of all library shipments and 58.1% of revenue last year, up from 81% of total unit shipments and 52% of revenues in 2005. Unit shipments of LTO libraries were almost 51,000 last year, representing revenue of $1.053 billion.

Freeman Reports expects LTO to continue its dominance, predicting LTO libraries will account for more than 96% of unit shipments, and 64% of revenues, by 2012.

LTO tape drive manufacturers include Hewlett-Packard, IBM, Quantum, and Tandberg. LTO library/autoloader manufacturers include Fujitsu, HP, IBM, NEC, Overland Storage, Qualstar, Quantum, Spectra Logic, Sun/StorageTek, and Tandberg. (An autoloader-also referred to as a mini library or autochanger-has only one tape drive, as opposed to a library that can have multiple tape drives.) LTO media manufacturers include vendors such as Fuji, Imation, Maxell, Sony, and TDK.

The growth in the LTO space came at the expense of all other tape formats, most notably the DLT/SDLT and 8mm formats.

LTO libraries are even encroaching on the high-end half-inch cartridge sector. Half-inch cartridge libraries accounted for 2.7% of unit shipments and 37% of revenues last year and are expected to account for 2.1% of unit shipments and 35% of revenue in 2012.

DLT libraries took a big hit last year, declining 46% in terms of unit shipments (from 6,481 units to 3,521 units). DLT libraries represented 6.1% of library shipments in 2006 (down from 10.7% the previous year) and 4% of library revenue (down from 4.6% in 2005).

Freeman Reports predicts that the DLT/SDLT share of the market will approach 0% in 2012, leading some observers to question Quantum’s plans for future generations of the technology as the company increasingly emphasizes its LTO program. Quantum’s market share (26.7%) of the LTO library market is second only to IBM’s (29%), followed by Sun/StorageTek with a 26.2% share of the 2006 market in terms of revenues, according to Freeman Reports.

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Shipments of libraries based on the 8mm tape format (including AIT) declined 40% in 2006. According to Freeman Reports, lack of backward compatibility hindered end-user adoption of AIT-4 products, although AIT manufacturer Sony rebounded near the end of last year with the introduction of the AIT-5 format, which has a native capacity of 400GB per cartridge (1.04TB compressed) and a transfer rate of 24MBps. In addition to Sony, vendors such as Qualstar and Spectra Logic sell libraries based on AIT technology.

Given these market dynamics, it’s no surprise that there’s been some consolidation in the tape library market. Last year, for example, Quantum completed its acquisition of ADIC, Tandberg acquired Exabyte, and Grau discontinued manufacturing of tape libraries.

Speeds and feeds

LTO-4 features a native capacity of 800GB per cartridge (1.6TB, assuming 2:1 compression), which is twice the capacity of LTO-3 cartridges. LTO-4’s native transfer rate is 120MBps (240MBps in compression mode), vs. 80MBps for LTO-3, which translates into a backup rate of approximately 864GB per hour.

LTO-4 is backward read/write-compatible with LTO-3 tape cartridges and is backward read-compatible with LTO-2 cartridges.

The LTO-4 specification doubles the capacity of the LTO-CM (Cartridge Memory) to 8KB. The CM memory chip uses an RF interface, which allows remote reading of its stored information, such as calibration information, manufacturer’s data, and initialization parameters. The CM can store user-supplied information, such as the age of the tape cartridge, how many loads have occurred, how many temporary errors have accumulated, etc.

As does LTO-3, LTO-4 supports WORM functionality. (Other tape formats that support WORM include various half-inch tape formats from vendors such as IBM and Sun/ StorageTek, Quantum’s DLT/SDLT, and Sony’s AIT.) Unlike LTO-3, LTO-4 supports drive-level, 256-bit AES (Advanced Encryption Standard) encryption.

Drive-level encryption (which is also available in various half-inch tape drives), is hardware-based and is faster than software-based encryption and less expensive than appliance-based encryption. (For more information on encryption, see “Options abound for tape, disk encryption,” p. 30.)

Spectra Logic (uniquely among tape library manufacturers) offers hardware-based encryption in its libraries, but the company will support drive-level encryption in its libraries configured with LTO-4 drives.

It should be noted that the LTO-4 specification does not require encryption, and it does not dictate a specific method of implementing it. However, the standard does include a media interchange specification so that users can interchange encrypted tapes between drives from different LTO-4 drive vendors.

Recent product intros

Among the larger LTO vendors, IBM was early out of the gates in May with shipments of LTO-4 drives and libraries. Big Blue’s LTO-4 drives use the same encryption technology-and key management functionality-that the company has been using in its higher-end TS1120 half-inch tape drives.

IBM has five products in its LTO-4 lineup:

  • The TS2340 LTO-4 tape drives are priced at $5,170 with an LVD SCSI interface, or $5,681 for versions with a Serial Attached SCSI (SAS) interface;
  • The TS3100 tape library has one LTO-4 drive and a choice of LVD SCSI, 4Gbps Fibre Channel, or 3Gbps SAS interfaces. Pricing starts at $5,770;
  • The TS3200 library has one or two LTO-4 drives and any of the three interfaces (SCSI, Fibre Channel, or SAS). Pricing starts at $5,770 for a single-drive configuration;
  • The TS3310 library has up to 316.8TB of capacity (30 to 396 cartridge slots) and up to 18 drives. Pricing starts at $16,530; and
  • The high-end TS3500 library has a multi-path architecture and scales up to 16 frames, 192 tape drives, and more than 6,000 cartridges for up to 10PB of capacity. Starting price is $22,800. (For more information, see “IBM ships LTO-4, broadens encryption,” InfoStor, June 2007, p. 1.)

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Also in May, Tandberg Data began shipments of its model 1640 LTO-4 drives. As are IBM’s, Tandberg’s LTO-4 drives are available with SCSI, SAS, or Fibre Channel interfaces. The drives include 128-bit encryption and are priced at approximately $4,499, including a copy of Symantec’s Backup Exec QuickStart Edition software.

This month, Tandberg began shipping two LTO-4 libraries specifically for Mac OS X platforms-the Magnum 224 and 448. The 2U Magnum 224 has one Fibre Channel interface, 24 tape cartridge slots, and up to 19.2TB of native capacity. The 4U Magnum 448 has one or two LTO-4 drives, and 48 tape cartridge slots for a capacity of up to 76.8TB. Single-drive configurations of the Magnum 224 and 448 are priced at $8,500 and $12,500, respectively.

Qualstar began shipping tape libraries equipped with LTO-4 drives and media in April. LTO-4 drives are available in Qualstar’s TLS-8000, RLS-8000 and XLS Enterprise series of libraries. (Qualstar’s existing LTO-1, LTO-2, and LTO-3 libraries can be field-upgraded to LTO 4.) Capacities range from 8.8TB to 10PB with more than 6,000 tape cartridges in the XLS Enterprise library.

Last month, Overland Storage announced that it will incorporate Hewlett-Packard’s LTO-4 drives in its NEO and ARCvault series of tape libraries. The company also announced that the LTO-4 drives will be integrated into the HP StorageWorks MSL6000 libraries manufactured by Overland under an OEM agreement with HP.

Overland’s LTO-4-based NEO libraries range from 24TB (uncompressed) on the NEO2000 to 400TB on a 500-slot version of the NEO8000 library. Native transfer rates range from 864GB per hour to 5.2TB per hour. Pricing starts at $16,615.

Overland was expected to begin shipments of LTO-4-based ARCvault libraries this month, with capacities ranging from 9.6TB on the ARCvault 12 to 38.4TB on the ARCvault 48. Native transfer rates range from 432GB per hour to 864GB per hour.

Despite advances such as LTO-4, tape is under constant pressure from disk-based backup. And tape vendors have responded by decreasing prices to maintain tape’s cost-per-megabyte advantages. For example, at the OEM level, pricing for LTO drives has declined from about 2.8 cents per MB in 2001 to less than 0.4 cents per MB this year, according to Freeman Reports. And compression essentially cuts the cost-per-megabyte in half.

Another factor driving down the cost-per-megabyte of tape libraries is the extreme scalability of today’s libraries. Sun/StorageTek’s SL8500 library, for example, can scale to more than 300,000 tape cartridges for a capacity of about 120PB using LTO-3 cartridges.

Although some disk subsystem vendors pushing their systems as alternatives to tape claim a lower cost-per-megabyte, tape is still less expensive than disk arrays. However, the total cost of ownership of a tape library includes the initial hardware and software costs, the cost of data conversion from previously used formats (if applicable), initial and recurring costs of media, costs to transport and store recorded media, software and hardware upgrades, as well as service and maintenance costs.

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