Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Chuck Murphy from Sidoti & Co.
Chuck Murphy – Sidoti & Co.
You mentioned the pressures that you’re seeing in tape from the open architecture in the deduplication. Can you talk about when that sort of pressure might kind of plateau and what kind of impact are you seeing on your margins these days for tape?
Frank Russomanno
When we talked about the factors impacting tape, the ones that we outlined they are virtual tape and deduplication, both of which have been around for a while, have impacted us over the past couple of years. When exactly is that going to reach its peak, that’s very difficult for us to say because that is a facility-by-facility decision as to what their plans are for their data.
What we are confident of is that archival storage is the best and most cost effective way to store your data long-term. We see very little impact in that area, however when we talk about back-up that is an area where we have lost the volume.
Now, let’s dig a little bit deeper into the enterprise and separate it into data center environment and mid-range environment. In the data center environment there are several new growth formats, by they the IBM system of 3592 and the Sun StorageTek T10000 systems. Both of those systems are gaining momentum around the world and we see positive growth opportunities for both of those. We continue to grow quarter-on-quarter with T100000 especially and we do have both the Sun and IBM distribution business; so we don’t believe we’re losing share in that segment.
When it comes to the open formats with the LTO there five suppliers like you know and there are currently four major LTO formats out there, LTO 1 to LTO 4. LTO four is gaining momentum and growing fast, LTO 3 has peaked and we are able to participate once again with both the IBM brand, Imation brand, TDK brand, as well as the Sun brand to sell those products.
The issue for us there is we see some former data centers moving to open architecture and its hard to tell via changes in technology like virtual tape and deduplication versus open architectures like using more LTO which is of greater impact. Well obviously we would prefer open architecture if someone is going to make a change because then we have a chance to participate with all of our brands. But, it is very difficult for us to put a precise time on when this all might change, especially in today’s economic conditions.
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