Quantum to Spin Off NAS Division

By eweek  |  Posted 2002-10-15

Quantum to Spin Off NAS Division

Enterprise tape specialist Quantum Corp. is spinning off its NAS [network-attached storage] products into a new company.

The new company, Snap Appliance Inc., will pay Quantum $11.3 million to take over the Snap Server and Guardian product families and will acquire privately owned Broadband Storage Inc., of Irvine, Calif., separately for an undisclosed sum, officials said on Tuesday.

"The NAS/SAN [storage-area networks] convergence that many companies are focusing on, we didnt feel we could go there on our own," Larry Orecklin, president of Quantums Storage Solutions Group, in Milpitas, Calif., told eWEEK.

Broadband Storage is developing converged products but wont ship them until next year, he said.

Orecklin denied industry rumors that the spin-off was sparked by pressure from Quantum partner Network Appliance Inc., which recently launched its own convergence product. But its in Snap Appliances plan to expand its mid-range target market upwards, he said.

"I think this is a good move thats going to make most parts of the company focus more efficiently. Under [former Quantum CEO] Michael Brown, it seemed like they were accumulating storage companies, and they werent all in the same segment of the market," said Arun Taneja, an analyst with Enterprise Storage Group, in Milford, Mass. "Theres so much stuff to be done on data protection," he said, referring to Quantums core tape businesses.

Snap Appliance may scale its product even higher than Network Appliances, Taneja said.

"They will certainly be a contender," he said. But, "I do have a concern. The NAS virtualization market is definitely oversubscribed."

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Broadband Storages former CEO, Jack Staub, has left the company, he said.

Meanwhile, at Quantum, "what you will see from us is to continue to add to the disk backup and enhanced backup line," Orecklin said.

Quantum will have less than a 20 percent equity stake in Snap Appliance, Orecklin said. Eric Kelly, former president of Maxtor Corp.s now-defunct NAS division, will be Snap Appliances first president and CEO, and most Quantum employees will be retained, officials said. The deal will not affect Snap Servers or Guardians distribution channels or warranties, they said.

The spinoff, to be based in San Jose, Calif., follows Quantums recent acquisition of low-end tape competitor Benchmark Storage Innovations Inc. and the hiring of former Microsoft Corp. President Rick Belluzzo as CEO. The spinoff was being considered before Belluzzo joined, Orecklin said.

More details will be announced Oct. 27 when Quantum announces its second-quarter earnings, officials said.

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