The future of physical tape

Chris Mellor over at The Register posted an article discussing Santa Clara Consulting Group’s (SCCG) recent forecast of the physical tape market.  In summary, SCCG’s latest analysis indicates that physical tape sales (both media and drives) decreased 25% in 2009 and 7% in 2008.  Some may suggest that this accelerating decline is a sign that tape is dead.  I respectfully disagree. Tape still plays an important role in data retention and archival and will be used for years to come.

There are some bright points in SCCG forecast.  They suggest that LTO drive revenue will grow at a 2.47% compound annual growth rate (CAGR) through 2014 while tape revenue will decline by a 2.21% CAGR. Clearly they believe that LTO will continue to dominate the market and outperform all other formats.

Analysis

Disk-based backup has emerged as the preferred target for backup, and deduplication has further improved the business case by reducing storage footprint and cost.  However, tape still has a meaningful place due to to its density, portability and power efficiency.   It is ideal for longer term retention and archival and purchases will continue as indicated by the growth in tape hardware sales.

SCCG suggests that the total market for tape automation was $1.6B in 2009. This represents a substantial revenue opportunity for companies who can drive innovation. Many tape suppliers have re-focused on disk technologies and there is potential for innovative to vendors differentiate their solutions through unique hardware, software and firmware functionality.  These added features could enable the company to grow faster than the market.

Finally, I also believe that the 2009 numbers are understated.  2009 was a difficult year for IT and most companies were forced to reduce expenditures.  These reductions negatively impacted projects throughout the datacenter including tape-centric ones.  Mellor suggests that a consistent 25% annual decrease in tape spending will lead to tape irrelevance in four years; I believe that the 25% decline is an aberration and that the future outlook is not nearly so bleak.  In fact we have already seen a number of storage and tape-centric companies report improved earnings and profits in 2010.

Conclusion

In summary, it is not surprising that 2009 was a difficult year for tape sales.  The combination of a poor economy and the continued move to disk-based solutions impacted the tape market.  However, tape still has an essential role in long-term retention and archive and will maintain its importance into the foreseeable future.  I believe that forecasts of the death of tape or even its near-term irrelevance are over-stated, and that tape will be with us for many years to come.