History 2003: OnStream Dies Another Day

OnStream Data, based in The Netherlands, was granted bankruptcy protection last April 28, which also lead to the failure of its US subsidiary in San Diego, CA.

The storage industry thus has one less tape drive manufacturer, leaving only 6: Exabyte (itself struggling), HP, IBM, Quantum, Sony and StorageTek. Recent disappearances also include M4 and Benchmark, acquired by Quantum, the merger between Ecrix and Exabyte, Overland’s decision to withdraw from the sector, followed by Plasmon, Iomega and Fujitsu, not to mention many others.

This consolidation can be explained by a stagnant, even declining market. For OnStream, it was no longer tenable. First, because it was the smallest of the remaining firms. IDC for 2002 gave it only a small part of the worldwide market, 1.1% for a measly $20.3 million in revenues. Additionally, it had positioned itself in the segment hardest hit by the decline, that of low-cost units.

OnStream, which spun off from Philips Electronics in 1998, had already experienced the hardships of bankruptcy, back in March 2001, for its US subsidiary, but eventually managed to make a fresh start, after losing 160 of its 400 employees, as well as 2 entities, OnStream Data for one, for drives, with a more modest US subsidiary, and then OnStream MST for tape heads and RF MEMS switches.

The most recent additional problem: Onstream never succeeded in signing a major OEM, something that is indispensable in order to exist within the tape industry, unless, like HP, IBM or StorageTek which have a significant captive market, even when the company has several major distributors, such as Ingram, Tech Data, MCE or Data Media.

What we didn’t know before, however, was that according to an insider source at OnStream, the company has also acquired Verbatim’s Mexico plant for the production of ADR cartridges.

This article is an abstract of news published on issue 187 on August 2003 from the former paper version of Computer Data Storage Newsletter.