Quantum CEO ready to acquire to expand StorNext

Jamie Lerner’s first 90 days as Quantum CEO confirmed the idea he had about the company when he took over. Discussions with customers convinced Lerner that Quantum’s greatest strength and greatest opportunity is storage for managing rich media data and video.

Now he has a solid plan for going forward: to complement Quantum’s StorNext file system technology with software features developed internally and through acquisition. Lerner said Quantum will also redesign its sales team more around specific solutions than geographies.

“What Oracle is to data management and what Cisco is to networking, that’s what Quantum is to rich media data,” Lerner said in an exclusive interview. “We see ourselves as the leader in  infrastructure for managing rich media and video.”

Lerner said Quantum will add storage services intended specifically for that rich media and video. These services differ than storage features for traditional IT applications.

“We have storage, policy management and tiering technology,” Lerner said. “Over the next six to 18 months, we will layer on data services for video. Traditional data services – deduplication, compression, snapshots, clones, replication – are rarely used on video. With video you need a totally different set of data services. You need to search not just by keyword, but by image. You need deep media catalogues to know what media assets you have, what form they’re in, who has edited them. And you need a lot of analytics for video surveillance. Are people on video having an argument or holding a weapon? Has someone left a bag for a long period? Those are the data services needed for video.”

Lerner said Quantum will make core architectural changes by layering software modules on its current product. Those new modules will mostly be subscription based and cloud-hosted. He also said Quantum is likely to become a more aggressive acquirer of smaller storage companies.

“You’ll see a combination of tuck-in acquisitions to add features, skills and capabilities, and we’ll likely buy some technologies that are complete standalone entities,” he said. “They’ll be mostly software and cloud in nature, and heavy in rich media data services – analytics, a search catalog and other areas that will bolster our ability to handles petabytes of rich media.”

Lerner said he sees Quantum’s tape products retaining a large role in long-term archiving and cloud storage. The new Quantum CEO said the vendor will continue to see its DXi disk-backup appliances, while its dedupe capabilities will be woven into other storage platforms as a feature. But the main focus of development will be around StorNext and storage for rich media and video.

“Customers have figured out how to manage Oracle, they’ve figured out how to manage their email, but they are really struggling when incorporating video into their business,” Lerner said. “That’s the fastest segment of data growth.”

When Lerner became  Quantum CEO in July, the vendor was knee deep in an internal accounting probe to find the cause of financial reporting irregularities. The probe is now complete. The main issue it found was that Quantum recorded revenue earlier than it should have, with approximately $25 million to $35 million of prematurely recognized revenue as of June 30, 2018. “We expect it to be good revenue but it was recorded too soon,” Lerner said.

Quantum detailed those findings in an SEC filing in September. Now it is restating past quarters to place the revenue in the right periods. The Quantum CEO said the restatements are not expected to affect cash flow.

He said he expects the restatements to wrap up by the end of the year, so Quantum can begin filing its quarterly earnings reports again in early 2019.

“Most of the deep concern phase is behind us,” he said. “Now we’re putting in place new loans and accounting procedures. We’re on the down slope of most of the unfortunate things that have happened to this company over the last couple of years.”