On Top Of Tape Automation
Geoffrey Lilien, president of Lilien Systems, sees a trend toward tape automation in the form of autoloaders and libraries. That trend requires more VAR services, and that means VARs can realize twice the margin of single drive solutions.
Geoffrey Lilien, president of Lilien Systems (Mill Valley, CA), would rather talk about SANs (storage area networks) than tape. After all, SANs are hot, tape is not - or is it?
Some people will try to convince you that tape is dead. It's not. Granted, tape as it was 20 years ago is pretty much extinct, but tape as it exists today is sophisticated and evolving. Thank the Internet for that. Thank streaming video and audio and the "data explosion." There's a trend in tape toward higher capacity, smaller footprint, and automation. This has already started to spur some changes in Lilien's business and is sure to necessitate even more over the next couple of years.
As tape technology becomes more sophisticated, customers are faced with more choices. This means Lilien's sales staff must be knowledgeable enough to recommend the right solution for the customers' business needs. "Customers are confused," he said. "They just want something that works, and a VAR can help sort out the many options available." Lilien's customers must consider whether to switch to newer tape formats, like LTO (linear tape open), or to move up from a single drive to an automated tape device. For customers whose businesses are not extremely data intensive, they may consider migrating from tape backup to CD or DVD, or even hard drives.
Analysts have started writing about the shift from desktop and low-cost tape drives to higher-priced, network-oriented tape automation in the form of super drives and libraries. Bob Abraham, author of three Freeman Reports, follows the trend closely. According to Compact Tape Outlook, which was released in the fall of 2001, unit shipments of compact tape drives decreased by 31% in 2000. Abraham says the decline in units will continue through 2006 at an effective compound rate of 5%. "The rapid decline in these sectors underscores the paradigm shift from desktop backup to network backup," he noted.
VAR Sees Shift Toward Tape Automation
Lilien's Executive VP of Business Development Dhruv Gulati says he has already seen a shift in sales toward tape automation. Though he still sells more individual drives than autoloaders and libraries (on average 65% of his unit sales are for individual drives), less revenue comes from individual drives - only 30%. This is because of the added revenue the VAR realizes from providing the expertise and service necessary for a more sophisticated solution. Gulati anticipates increased sales of autoloaders and libraries in the near future. As the amount of data increases, many customers will move toward automated tape products.
For the smaller customers, attached writable CD drives are edging out the need to use single tape drive backup. Further, as magnetic disk prices fall, disk to disk backup is becoming more viable with solutions already available from Maxtor, Nexsan, and Network Appliance. The benefit tape still has over disk to disk is that it is removable and can be stored off-site. But as remote backups over IP become more viable and as manufacturers develop removable magnetic disks, single tape drive sales will dip even lower.
Gulati's interest in recommending disk to disk backup all depends on economics. "If the price becomes comparable, it could be a compelling venture," he said. "Access time to data would be faster, making recovery much faster. I'm skeptical, though, because if they are able to keep the cost down, then how reliable will the disk be?"
And Abraham's report shows autoloader shipments increasing from 139,200 units in 2001 to 203,600 in 2006, a compound growth of 8%. Further, revenue for autoloaders will grow at a rate of 11% from $442 million in 2001 to $742 million in 2006. Another Fall 2001 Freeman report, Performance Tape Outlook, states, "Increasing shipments of Fibre Channel interface drives, the preferred interface for SAN, is a key factor contributing to the first rise in high-performance tape drive shipments since 1996. The growth of storage area networks provides unprecedented opportunities for secondary storage."
Opportunities are increasing because of the industry trend toward more sophisticated tape solutions, and this means adaptations are necessary by VARs like Lilien Systems. Lilien's engineers and sales staff must be much more knowledgeable about tape management than they used to be. His staff obtains its technical expertise through the vendors they resell products for, like Hewlett-Packard. Geoffrey Lilien decided several years ago to enter into an exclusive relationship with Hewlett-Packard. Dealing with one company's solutions means more continuity and less complication in training his staff. "It's not good to sell too many products that are similar," said Lilien. "Having to keep track of too many products confuses the sales reps."
Lilien's engineers train customers on the operation of their tape automation products and how to perform backups and restores. But in the same way Lilien's staff relies on the vendors' training programs, they also encourage their customers to obtain vendor training prior to installation. This makes what Lilien calls the "technology transfer" much smoother.
Finding Applications For Tape Is Easy
Currently, the major applications for tape storage are magnetic disk backup, archival storage, data distribution, and network storage. As the amount of data grows because of the Internet and the increase in digital audio and video files, the need for more capacity is coupled with the need for faster access to the data. Tape libraries help fulfill this need. Though not as fast as online storage, tape libraries, with their accompanying software, can locate the correct tape cartridge and rapidly buzz through it to find the requested data.
Abraham's Tape Library Outlook sees healthy growth in the library segment of the tape market. "Total market demand for tape libraries is projected to climb from 57,327 units in 1999 to 133,825 units in 2006, a compound annual growth rate of 13%. Total revenue is expected to increase from $2.2 billion to $3.8 billion over the same period, an 8% compound annual growth rate."
If that 8% growth seems satisfactory, keep in mind that is only for the hardware. "With software and services, our margins for automated tape solutions are between 15% and 25%," said Gulati. The major selling point in tape libraries is the ability to perform unattended backups. With a tape library, an administrator does not have to hover over the process, changing tapes as they become full. This also means that backups can be performed much faster, a major factor for customers with diminished backup windows.
A Witness To Tape's Evolution
Since Lilien Systems' founding nearly 20 years ago, Geoffrey Lilien has seen a huge evolution in tape technology. "Now that tape is denser and libraries are more reliable, people are using tape in a lot more instances than they used to. In the early years, tape backups were expensive. A large corporation with a lot of data [for that time] had to use room-sized tape silos, but as it became more of an open technology, cost came down, functionality improved, and more of the market could use tape."
Lilien has always strived to stay one step ahead of commoditization. As the LANs he installed in the early 1980s decreased in margin, he moved to servers and storage. As servers declined in profitability, he moved to storage and security, both physical and data-related. Though he'll still offer single tape drives to the laggards who are most comfortable with them, he knows the real future of tape is in automation.