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The OEM tape automation business dropped 31 percent in 2014

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January 14, 2015

StorNext's storage business is now a bigger franchise for Quantum than its deduplicating disk arrays, it would seem.

Quantum’s preliminary 3rd fiscal 2015 quarter results show revenues below guidance at $142 million but profits as predicted at $7 million as it manages its shrinking tape automation business as well.

To be sure, the OEM tape automation business dropped 31 percent in 2014 compared to 2013's 3rd quarter.

But overall revenues were down just 2.7 percent. There was a $2.4 million loss a year ago, so today’s profit is a nice turnaround.

DXI deduplicating disk array-based revenues were up $1 million to $24 million. Scale-out storage-based revenues increased a respectable 59.8 percent to $27 million.

Company CEO Jon Gacek’s prepared remarks said-- “GAAP net income was the highest in more than five years as we continued to capitalize on the strategic improvements we've made over the last 1 1/2 year and drive further operational efficiencies throughout the business.”

He mentioned “the tremendous market momentum our scale-out storage solutions continue to achieve in the first three quarters of our fiscal year grew nearly 60 percent over the comparable period the year before. In addition, we had our second consecutive quarter of year-over-year growth in DXi revenue."

Choppy revenues are changing to improving ones as Gacek and his team even out the business’ earnings in the face of relentless OEM tape automation revenue declines, and grow the newer disk and software-focused product revenues.

The business is smaller than it was in fiscal 2014, and has been shrinking since the $1 billion revenue seen in fiscal 2007.

However, the tide seems to have turned, at least for now. We must expect the fourth quarter results to be lower than this quarter’s. That’s the seasonal tradition in Quantum’s business.

You get the feeling that there’s some wind in Quantum’s sails and that the executive team is looking outwards more than inwards.

The cloud and big data are surely a few things they are looking at for now. The full results will be announced on January 29 and the outlook for the 4th quarter will be issued then.

If it's around the first quarter level of $130 million, then full year revenues will be about $535 million, down from the previous year’s $553 million.

Right now it’s showing a $3.9 million profit for the year. If the 4th quarter brings in a profit as well, despite the expected revenue decline, then that would be a significant improvement.

Fiscal 2011 was Quantum’s last profitable year, so any profit in fiscal year 2015 at all would be most welcome.

Regular readers of IT Direction will agree that it's been quite a while since we've talked about mainframes on this site.

Since 1994 when pundits first pronounced the death of the mainframe, IBM has just released a new one, and it looks very classy for a mainframe. The new mainframe is designed specifically for the mobile segment of eCommerce.

IBM is hoping that the billion dollars it invested into the new z13 mainframe will get the IT community as excited as the company is.

Big Blue's new z13 mainframe has enough power to handle real time encryption of all mobile transactions at any scale, all the way up to its claimed 2.5 billion transactions a day capacity, IBM claims.

The theory is that every eCommerce transaction touches off dozens of other system interactions at the same time, and that generic Intel-based systems won't scale up to handle them especially as mobility drives up the number of transactions.

As IBM's announcement claims-- “Z-13 transactions are persistent, protected and auditable from end-to-end, and built-in analytics let fraud detection run against 100 percent of transactions.”

IBM's overall enthusiasm for open-source software pops up in various spots in the release-- the machine supports Hadoop for unstructured data analysis, along with DB2 BLU running as an in-memory database on Linux, and the huge machine also supports OpenStack.

The latter will dovetail nicely into other cloud capabilities the company is highlighting, such as the ability to run 50 virtual servers per core, for a total of 8,000.

Those last two data sets suggest the refrigerator-sized z13 will currently run 160 processor cores per cabinet.

IBM says the processor pushing the z13 along runs at twice the speed of the most common server processors, supports 300 percent more memory, and with double the bandwidth and vector processing analytics.

Later this year, there'll also be a new z/OS software iteration to boost the thumper's in-memory analytics and analysis, once again pitched as a big thing for the mobile business.

Source: Quantum Corp.

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