Qualstar Looks to Future as Its Product Reaches End of an Era By CARLOS MARTINEZ Staff Reporter Twenty years after making its mark in the then growing reel-to-reel computer tape drive business, Simi Valley-based Qualstar Corp. last week became the last company to exit that segment, marking its complete transition into data storage. The company’s once state-of-the-art reel-to-reel tape drives have been mostly replaced by hard disks and data storage equipment in the last two years. But as that market closed, its digital storage segment continued to grow in recent years despite a drop in sales during 2001. “We’ve been pleased with the fact that we were able to seamlessly transition from the tape drive market to the digital storage area,” said Qualstar CEO William J. Gervais. At a brief ceremony last week to mark the last reel-to-reel tape drive manufactured at the facility, Gervais and other company executives gathered with employees to give a collective thanks to the tape drive technology for giving the company years of growing revenue. “We made 27,294 of the tape drives and it provided us all with a pretty good living, so we’re thankful,” he said. The company’s nine-track device proved popular for years with companies’ computer networks which were often incompatible with other networks. But the nine-track system remained the only officially recognized medium for data interchange between incompatible systems. Altogether, the company believes billions of reels were recorded over a half century since the nine track system was introduced by IBM Corp. Several million reels are still in used today around the world, Gervais said. “In 1992, one by one, companies were getting out of the business and every time someone got out, we got some of the residual business,” he said. But it wasn’t until 1995 that the company moved into the data storage business and began withdrawing from a segment that had been its bread and butter. Thanks to its tape technology which closely resembled technology used for developing data storage equipment, Qualstar soon became a leading storage and tape library manufacturer and provider. With storage making up just 10 percent of sales at first, it began to grow before eventually surpassing its tape drive business in 1998. Picking up customers “We went into the tape manufacturing business and it was quite easy,” Gervais said. “At the time people that were there were charging too much money to their customer base and we started picking up a lot of those customers.” By 1998, the company’s revenue started to grow rapidly, with $19.2 million that year, followed by $26.7 million in 1999, $49.3 million in 2000, then $51.6 million in 2001, before dropping to $37.6 million in 2002 and to $33.6 million this year. The company’s fiscal year ends on June 30. Despite the decline in business, Qualstar