History 2003: Seagate Tape Drive Business Becomes Certance

Seagate Removable Storage Solutions (RSS), i.e. the company’s tape drive business has not reported directly to Seagate Technology since last year.

It was owned by New SAC, the private corporation created by an investment group led by Silver Lake Partners and Texas Pacific Group, which had acquired the assets of Seagate Technology in November 2000, before launching a recent IPO.

Seagate RSS has just changed its name, as of last month, to Certance, with its HQ still located in Costa Mesa, CA.

“The name Certance delivers on the 2 key attributes required in a storage solutions partner, certainty and permanence,” is how Howard Matthews, newly-named president and CEO and former VP and GM of RSS, explains the name change.

The new SAC boasts 3 subsidiaries as the result of the dismantling of the old Seagate: Seagate Technology now in disk drives only, Crystal Decisions and Certance.

This tape drive activity dates way back, the result of the merging of a number of companies including Archive, Ardat, Irwin, Maynard and Conner Peripherals.

In all, it accounts for some 12 million tape drives installed, a fraction of Seagate’s total business, when you consider that it shipped more than that in HDDs … each month.

What’s more, Seagate’s successive CEOs, Al Shugart then Steve Luczo, always showed little interest in tape drives, so much so that we usually had to press them in order to get them to talk about the sector in interviews.

Furthermore, it hasn’t been demonstrated that the activity is even profitable.

It’s long been our impression that Seagate would have preferred to find a buyer, but has never managed to do so.

IDC does place Seagate in the ≠1 position for tape drives shipped WW in 2002, but this mostly for low-cost units, since the firm only ranks 5th in revenues, behind IBM, HP, Quantum and StorageTek.

Now that Certance is no longer a division, but a company in its own right, it will have to hustle a little more than in the past. Unfortunately, it holds few aces, relying on 3 main drive lines:

• Travan, in decline;
• LTO, which it launched with IBM and HP, but which is in last place behind the other two, by far. In fact, while its rivals have already released their LTO-2 offerings, we’re still waiting to see what Certance will come up with;
• finally, the 4mm DDS: these DAT drives were dropped, then relaunched with HP in a new fifth gen. But here again, we’re still waiting to see the drive, while the computer giant has been shipping them out by the carton. Officially, they should ship towards the beginning of summer, with specs (36/3.5, compatible in read and write with previous DDS-3 and -4 technology) nearly identical to those of HP’s product.

Overall, the tape drive market is stagnant, even in decline. Additionally, real margins in this market come from the media, not the drives.

Unfortunately, the Travan tapes come from Imation, while Seagate (and now Certance) has never manufactured LTO or 4mm cartridges.

The company also resells a few autoloaders, which it also does not manufacture itself.

In conclusion, there is considerable work ahead for the new CEO and the chairman, Don Waite and his entourage of 5 VPs: Mike Lackowicz for product strategy and business development, John Moore for tape head, Jim Wold for engineering, Mike Orgill for operations, and Michelle Vilchuck for product management and customer support. Perhaps they’ll put more heart in it, given that they no longer have to consider themselves the poor relations of a rich company.

This article is an abstract of news published on issue 184 on May 2003 from the former paper version of Computer Data Storage Newsletter.

Note: Quantum Corp. purchase Certance for $60 million in 2004.