Tape automation to undergo a renaissance

Posted on December 01, 1999

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Tape automation to undergo a renaissance

Led by DLT, the automation market will record a 25.3% CAGR over the period 1999 to 2003.

Robert Amatruda

Once thought to have fallen short in terms of capacity and performance, tape storage has come back strongly. A crop of high-capacity, high-performance drives will soon be available, offering 100GB of uncompressed capacity with data rates in excess of 10MBps. These drives are expected to catalyze the tape automation market, poising it for a renaissance next year.

This growth is illustrated in IDC`s Tape Automation Market Forecast and Review, 1999-2003. According to the report, the OEM-equivalent market value increased 31.8% in 1998, totaling nearly $1.7 billion, and is on course to top $2 billion by the end of this year.

Furthermore, we anticipate the OEM-equivalent market value to increase by 25.3% CAGR over the forecast period, fueled by the growing need to backup and manage widely distributed data assets.

In terms of unit growth, the worldwide tape automation market will also experience exceptional growth. We believe unit shipments will increase by 17.3% to nearly 143,000 units by year-end, up from 121,000 units in 1998.

Furthermore, we expect unit shipments to increase by 25.2% CAGR over the forecast period. Leading the way are DLT and DLT-derivative technology segments, increasing by 35.3% CAGR over the same period.

Key study findings include:

•Total worldwide tape automation unit shipments increased by 9.3% in 1998.

•Total OEM-equivalent market value increased by 31.8% at the close of 1998, totaling nearly $1.7 billion.

•DLT tape libraries accounted for 44% of total worldwide OEM-equivalent revenue and 45% of total unit shipments at the close of 1998.

•DLT and its derivatives will remain the leading tape automation technology between 1999-2003.

•Total worldwide tape automation "if sold" OEM revenue is expected to increase by 25.3% CAGR 1999-2003, totaling nearly $5.2 billion.

•Total worldwide tape automation unit shipments are expected to increase by 25.2% CAGR 1999-2003, totaling 350,500 units.

Technology overview

DLT and The Big Five. Through the forecast period, DLT and DLT-derivative technologies will continue to dominate the market. DLT is broadly accepted by third-party automation OEMs, while Benchmark Tape Systems has priced its DLT1 to fit nicely in entry-level automation.

More importantly, the leading library OEMs integrate DLT tape technology into their subsystems, driving significant unit volumes and revenue solely from DLT.

LTO and The Gang of Four. LTO initiative could mark a sea change in the library market if follow-on DLT drives (e.g., Super DLT) are late to market or do not retain backward compatibility with installed drives and automation. While we expect LTO shipments to be modest at the outset, the potential is excellent. We believe LTO shipments will ramp strongly over the period 2000 to 2003, at a 62.4% CAGR.

Nonetheless, the onus will be on Hewlett-Packard, IBM, Seagate, and Fujitsu to secure third-party OEM support from leading tape automation vendors. To be a serious challenge, LTO will also need to feature compelling performance and attractive pricing.

The Mammoth/AIT shoot-out. 8mm automation will enjoy some growth over the forecast period, thanks to second-generation Mammoth and AIT drives from Exabyte and Sony, respectively. Ecrix`s low-cost VXA also has an excellent opportunity to be built into autoloaders for a cost-effective storage solution.

However, we believe that Exabyte and Sony will via for dominance in the 8mm midrange library market. To remain competitive, Exabyte must push for broader acceptance of Mammoth drives from library OEMs.

According to our forecasts, 8mm will experience much more modest overall growth than the DLT automation segment. In terms of "if sold" OEM market value, the 8mm segment will increase by 11.8% CAGR during the period 1999 to 2003, totaling $355 million. Worldwide 8mm tape automation unit shipments will increase by 7% CAGR over the same period.

Ownership of the low end. 4mm market will continue to be weighted toward entry-level products. The technology will be primarily deployed in very competitively priced autoloaders. However, the bulk of 4mm shipments will remain stand-alone tape drives in PC servers priced below $25,000.

In addition, the 4mm tape automation market will be challenged by SLR, aggressively priced 8mm automation, DLT, DLT derivatives, and even LTO. The introduction of DDS-4 will not offset the expected erosion of unit shipments and OEM-equivalent revenues.

We expect the 4mm automation market to post a 10.8% revenue decline, while unit shipments will decline 5.6% through the forecast period.

Opportunity for SLR. While the SLR automation segment is smallest in terms of both revenue and unit shipments, new high-capacity, low-cost drives from Tandberg Data will revive the technology, especially in automation.

Like 4mm, SLR has been deployed primarily as stand-alone drives in entry-level servers and workstations. However, we believe the SLR 100 drive will significantly improve the technology`s adoption in entry-level automation, especially in autoloaders.

But to gain broader acceptance, SLR needs to be designed into a broader array of libraries. According to our forecasts, the SLR automation market will increase by 17.6% CAGR over the period 1999 to 2003.

Meanwhile, the half-inch automation market will remain a low-volume, high-value market. At the close of 1998, this market represented 37% of "if sold" OEM market value, with just 5% of total worldwide unit shipments. Overall growth will moderate through the forecast period, however. Total OEM market value will increase 5.9% CAGR over the period and unit shipments will grow 1.4% CAGR.

While StorageTek and IBM will continue to dominate the half-inch automation market with enhanced tape drives and libraries, we expect high-performance offerings from the 8mm, DLT, and LTO markets to encroach on this market.

Current library offerings support multiple tape technologies—wand many are SAN- or NAS-enabled. In fact, tape libraries now have all the hallmarks users have come to expect from fixed storage subsystems, including high capacity and performance, flexibility, ease of use, and lower costs.

In addition, native Fiber Channel tape drives will help propel the adoption of tape libraries outside the data center with more bandwidth for high duty-cycle environments. This added functionality will enable tape libraries and tape automation to remain viable well into the next century.

Bob Amatruda is a senior tape analyst with International Data Corp. (www.idc.com), in Framingham, MA.


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