StorageTek Unspools A Rebound Via Tape
By CHARLES FORELLE
Staff Reporter of THE WALL STREET JOURNAL
LOUISVILLE, Colo. -- In the world of big-business technology, where manufacturers work to squeeze entire computers onto thin "blades" of circuitry the size of a library book, the PowderHorn, a 12-sided cabinet taller than a man and as wide as two cars, stands out.
Made by Storage Technology Corp., the PowderHorn is an automated tape library, a set of shelves crammed with data-storage tapes that look like half-size videocassettes. A robot mounted on a graphite arm whips around from shelf to shelf, plucking off tapes and spitting them into waiting drives, a rare example of old-fashioned mechanics in the digital arena of high-tech.
"In 1987, when we developed tape automation, everybody laughed and said, 'Tape is dead,' " says Robert Nieboer, a global services executive at StorageTek, as the PowderHorn's maker is commonly known.
Now StorageTek has reason for mirth. As rivals proffering the latest digital-disk technologies have seen their sales head south, data tape has become a relatively hot sector in a market that has been otherwise generally tepid.
Tape drives are among the oldest kinds of modern computer technology, tracing their roots to the International Business Machines Corp. mainframes of the 1950s. As information-technology budgets shrink in the current tech slump, low-cost tape storage has become more attractive as a way to cache corporate data that continue growing torridly -- at a rate of 50% to 100% a year, according to some studies.
"Tape is getting kind of sexy now," says Frank Harbist, a vice president at Hewlett-Packard Co., the No. 1 vendor of tape drives. To burnish tape's dusty image, nine major tape media and device manufacturers last year formed an industry organization that promotes the technology.
Tech's climb has made a rocky ride for StorageTek, the No. 1 tape-automation vendor, which was forced to file for bankruptcy protection in 1984. It re-emerged only to face more trouble, and by late 1999 was performing so dismally that it put itself up for sale, and its chief executive ultimately stepped down in a massive restructuring. Today, the company is a Wall Street favorite.
In the first quarter of 2003, StorageTek had earnings of $16 million on $480 million in revenue, up from earnings of $6 million on sales of $456 million in the year-earlier period. And Imation Corp., a 3M Co. spinoff that is one of the largest makers of tape cartridges, has seen operating income from its data-storage unit rise in each of the past five quarters. During the past year, Imation's stock has risen 27% and StorageTek's 68%. The Dow Jones Industrial Average has fallen about 2.9% in that period.
For the most part, data-storage tape works like audiocassette tape or videocassette tape. A spool or two of very thin plastic coated with metal is squeezed into a cartridge. Pop the cartridge into a drive, and the spool spins and a head reads and writes magnetic signals onto the tape. For years, it has been the standard way to archive large chunks of data. Some experts estimate that 90% of the world's digital data are stored on tape cartridges.
Tape's major benefits are its low cost -- in some cases one-tenth of disk's cost per megabyte -- and nearly infinite scalability: If you run out of space, it's easy to buy another tape cartridge; it's not so simple to wheel in a new disk array. Nor, with money tight, is it simple to pay for one. Storage managers who find their data exploding "are not saying, 'Let me write another check for a big batch of high-end disk,' " says Peter van Oppen, chief executive of Advanced Digital Information Corp., a maker of high-end tape libraries and software.
Nick Allen, director of research for storage at industry analyst Gartner Inc., says tape technology, after years of lagging behind disks, particularly in terms of reliability, has finally caught up. "There is more being invested in tape now than anytime in the history of technology," Mr. Nieboer says.
Tape also is benefiting from a renewed focus on data backup and recovery, as government regulators prod industries to keep better track of their stuff, and companies worry about the financial impact of losing critical data, a concern that intensified after the attacks of Sept. 11, 2001.
So when U.S. Bancorp decided to create a separate disaster-recovery facility in Maryland, the Minneapolis bank put three PowderHorn machines there and bought StorageTek products that allow it to archive critical data such as customer records and accounts in both next-door St. Paul, Minn., and Maryland nearly simultaneously. Previously, U.S. Bancorp had put tapes on airplanes and flown them offsite for disaster protection.
That, says Randall Pfeifer, U.S. Bancorp's vice president of data-center operations, was unacceptably slow. There has been a "need to shorten the amount of time it takes to recover the mainframe environment," he says. When starting the disaster-recovery project about 18 months ago, Mr. Pfeifer says, he examined switching tape backups over to disk. He dismissed that idea as too costly and complex.
Tape has its issues. It's slow, meaning that it's difficult to ensure that data are backed up close to the time they are created -- leaving open a window in which data wiped out in a crash couldn't be recovered. That's less of a problem with higher-speed disk. Still, tape has fended off a concerted push by makers of hard-disk storage devices like EMC Corp., which envision vast quantities of data moving from tape storage to low-cost disk technologies now available.
Write to Charles Forelle at charles.forelle@wsj.com1 |
