History 2002: Quantum Spins Off Snap NAS Division

Nearly every attempt by drive manufacturers to enter the storage subsystems market has failed.

Maxtor ceased its NAS activity, MaxAttach, while Western Digital sold Connex to Quantum. Seagate sold its majority holding in SAN maker Xiotech.

Now its Quantum’s turn to sell off its NAS division to a new company, Snap Appliance, for $11.3 million plus an option to receive up to $1.9 million later. This isn’t very high, if you consider that to enter the NAS business in 1999, Quantum put $85 million on the table in a stock transaction to acquire Meridian Data, and another $11 million in cash last year to get Connex.

Shareholders in Snap Appliance, based in San Jose and Irvine, CA, include the investment firms Moore Capital Management, Mellon Ventures and start-up Broadband Storage in addition to Quantum itself, which will retain 20%. Broadband Storage is an offshoot of Delphi Engineering, headed by Jack Staub, backed not surprisingly by the same 2 investors. Mellon gave $6 million last June, followed by an announcement of the close of a $16 million series A financial round several days later. Currently, the company’s web site links directly to snapappliance.com.

Broadband’s original mission was to develop a filer solution bridging the gap between SAN and NAS.

Among Snap Appliance’s executives are former Broadband employees such as Greg Bolstad, CTO, Mark Pollard, VP marketing and business development, and Kevin Anderson, controller, although Staub is no longer in the picture. Even more prominent are former NAS executives from Maxtor: Eric Kelly as president and CEO, Jillian Mansoft, VP WW sales, and Randy Gast, VP operations.

Despite the considerable effort that caused IDC to rank it ≠1 WW by a mile in 2001 for number of units, with a 42% WW market share, Quantum never quite succeeded with its NAS activity, even if it boasted shipments of more than 100,000 units and Dell as a major OEM.

“It was never profitable, and represented only 5% of the company’s sales,” explained Barbara Nelson, Quantum’s executive VP of corporate marketing.

Indeed, for its last reported financial quarter ending in September, NAS represented only $11 million out of total revenues of $215 million for the company. Thus, Quantum’s decision to exit NAS seems fairly wise, “to focus [its storage solutions group] exclusively on data protection.”

While it may be true that some NAS may be used for backup, but according to Nelson, only 20% were Quantum’s.

Quantum’s new CEO, Rick Belluzzo, is clearly defining his new policy: acquire DLT maker Benchmark and sell of the NAS portfolio.

The company also sold, last September for $11 million to Pantheon Ventures, its Quantum Technology Ventures division, which had invested, more or less happily, in 18 companies, including several involved in storage (Aristos Logic, Nishan Systems, Sierra Logic, StoragePoint, Voltaire and Vormetric).

Snap Appliance’s portfolio essentially includes the low-end Unix-based Snap and mid-range Linux-based Guardian NAS servers.

The new entity will be able to rely on a large channel developed by Quantum.

Snap Appliance no longer has the European beachhead that Quantum maintained, but several distributors have already decided to resell its NAS on the continent, including Bell Microproducts, Data Media and NovaStor, a new Swiss distributor that was just founded by former Quantum NAS employees, including Andy Wilsky and Elisabeth Harth.

This article is an abstract of news published on issue 178 on November 2002 from the former paper version of Computer Data Storage Newsletter.