Storage Soup

Oct 28 2009   2:12PM GMT

Quantum: ‘Our strategy is working’

Dave Raffo Dave Raffo Profile: Dave Raffo

Quantum execs are using their results from last quarter as evidence that the vendor can survive – and perhaps thrive – without EMC as a data deduplication partner.

Quantum reported a strong increase in disk and data deduplication revenue last quarter, the first since EMC’s $2.1 billion acquisition of Quantum’s dedupe rival Data Domain.

Quantum’s $28.2 million in disk and software revenue represented a 47% increase from the previous quarter and 36% from last year. That revenue includes Quantum’s StorNext clustered file system, but executives on the company’s earnings call Tuesday night said VTLs with dedupe made up a majority of the $28.2 million. They pointed to a “significant” increase in Quantum DXi disk sales, a “modest” increase in StorNext sales and slight decline in license revenue from EMC.

Quantum also cited three customer deals of more than $1 million each for its DXi7500 in the quarter. The increased disk sales helped Quantum beat Wall Street expectations with $175 million in revenue – up 9% from the previous quarter while down 19% from last year. Quantum’s $11 million profit was its second straight quarter in the black after a string of losses.

The numbers show Quantum still has a long way to go – EMC reported Data Domain alone brought in $105 million last quarter. But CEO Rick Belluzzo said Quantum gained momentum, and he hopes to take advantage of “disruption” caused by EMC-Data Domain by scoring new OEM deals and adding channel partners to transform the company.

“This company has historically been mostly about tape,” Belluzzo told SearchDataBackup after the earnings report. “Now I suspect people are watching the deduplication segment more closely.”

Belluzzo said the split with EMC prompted Quantum to chase large enterprise deals rather than rely on EMC to land those deals and pay Quantum a licensing fee.

“The EMC change did clarify things,” he said. “We made an aggressive shift in our go to market focus as the EMC relationship went through a dramatic change. We always struggled with large accounts on whether we would compete with our partner there. But after EMC bought Data Domain, we said we’re going to play to win. ”

On the earnings call, Quantum executives said they see opportunities to partner with other storage vendors looking to add deduplication. Afterward, Belluzzo said he’s still talking to new possible OEM partners.

“It’s too early to suggest the timing of a deal, but we expect to have another OEM partner,” he said. “We have a number of opportunities, although they could take different forms from the EMC deal.”

Belluzzo sees other possible openings for Quantum in the wake of the EMC-Data Domain deal. Quantum is already a Symantec OpenStorage (OST) partner, and Belluzzo says the vendor is looking to add resellers who feel left out in the wake of the EMC-Data Domain deal.

“There’s confusion in the reseller channel,” he said. “Some may have a relationship with EMC and not Data Domain, or the other way around, and there’s some insecurity around that. We get that feedback from a lot of people.”

Quantum is hoping its new DXi6500 midrange dedupe system can bolster sales through the channel.

“This was a critical quarter for Quantum given the economic downturn and changes in the deduplication landscape,” Belluzzo said. “Despite these factors, we were able to deliver strong results.”

Quantum’s stock price increased a whopping 21.5% today, up 35 cents to $1.98.

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