Quantum CEO on EMC's buyout of Data Domain

30.07.2009

The EMC-Data Domain thing is a wild card and certainly changes a lot of things. We expect that revenue [recognized from selling deduplication technology to EMC] to be flat. We also recognize that EMC will be focused more on their Data Domain technology very aggressively over the next year and that that opportunity will diminish for us over the next year.

Our mission is to build on top of that [lost revenue] with our new opportunity. This is a very exciting space. The market is going to triple over next few years. It's got a lot of potential and we're pleased to be where we are as a company. But we have a lot of work to do and now's the time to do with that revenue stream what we've done with the rest of the business and that's to make the transition that will make us a systems company.

It means we're going to sell systems in the backup, recovery and archive space that includes software -- versus hardware, which is traditionally where we've been as a company. And it means we will have a business model that reflects that, such as higher gross margins [and] more investment in R&D in those areas. So our intention is to take our tape systems and move to disk-based systems with a richer software stack around products such as our DXi and StorNext [data management software].

Our strategy is to do one thing and that's to build our disk systems and software business. That is what's going to make us more valuable. We don't comment on M&As. This space is hot, and this action by EMC has raised the profile of deduplication. So we tend to focus more on what our partnerships are, rather than M&As; We've always felt that's out of our control. The only thing we can do is make the company more valuable, build more paths to market with other players, and if an acquisition is what's best for our shareholders, then we'll consider that.

Our intention is to move more into the midrange with a new platform and enhanced software and better NAS functionality. That's where we're headed. Our big focus has been on building our disk systems and software business. That's the area we feel is the big opportunity for the company. We developed that strategy a couple years ago. We are behind plan in building that business and we talked a lot [in our earnings call] about how to address that, given the fact that our relationship with EMC has changed.