History (1996): Start-Up JTS in 3-Inch HDDs

A start-up by the name of JTS Corp. (Sunnyvale, CA) has entered the HDD market with a new 3-inch form factor.

JTS, which stands for Jugi Tandon Storage, was founded in 1994 out of the ashes of Kalok, specialist in super-thin 3.5-inch drives, that went bankrupt.

JTS acquired some of their patents as well as specific personnel, including a well-known engineer, Steven L. Kaczeus, CTO and founder of Kalok, along with the president and CEO David B. Pearce who will find a new place elsewhere in JTS’ corporate structure.

At least two seasoned veterans of the storage industry will figure in the future of JTS. Founder Jugi Tandon, of Indian origin, who lent his name to the one-time great Tandon company, former manufacturer of PCs and HDDs.

The second is Tom Mitchell, president and CEO of JTS, co-founder of Seagate and formerly president and COO of Seagate, then Conner.

On the subject of Mitchell: “With him it’s all or nothing,” says Alain Azar, Sofinnova Inc. (San Francisco, CA), a VC firm that fronted some of the $32 to $33 million invested in the affair so far, mostly from Indian and American banks, a figure that’s certain to climb still higher.

Azan hopes, no doubt, for the kind of remarkable return that he reaped with the original Tandon: “Sofinnova earned 350 times its original stake.”

JTS has already found a distributor, Western Digital. The latter has a minority investment (roughly $10 million) in the new company for licensing rights to all JTS’ technology (JTS holds the patent on the new form factor).

WD is preparing to announce drives with one or two 3-inch platters.

The relationship between the two firms in fact dates from way back, when Tandon sold its Winchester activity to Western Digital at the end of 1987 for $49 million.

One of the first OEMs to take notice could well be Compaq, which provided $500,000 in R&D and already qualified the drive, but some major Taiwanese notebook manufacturers may also come along. Among other names being mentioned are Dell, Olivetti and Zenith.

Mitchell expects his company to ship one million drives this year. Furthermore, he projects that JTS’ revenue will jump from $30 million to $430 million from this year to the next, an optimistic claim, like the figure of 2.4 million 3- and 3.5-inch HDD shipments in 1996.

The most interesting aspect of all of this is that JTS is developing a strategy of production for drives in both form factors.

Volume production began this month in India.

Note: JTS was declared bankrupt in 1999.