History 2001: OnStream Closes Shop in USA

OnStream Inc. filed for bankruptcy under Chapter 7 on March 16. The HQs in Longmont, CO have been closed, and roughly 80 people let go.

Why this sudden end, when the company had sold some 200,000 ADA tape drives? According to Toine Stokbroekx,sales manager for Central Europe, the company was too big, with too many employees drawing salaries that were too high.

OnStream International in the UK, which was the firm’s European marketing HQs, has also closed.

All that remains now is concentrated in Eindhoven, the Netherlands, where the drive factory and another 200 employees may be found.

There, the company is still hoping for a miracle, in the form of a rich European investor (Tandberg?) that will bring the necessary money for continuing along more modest lines.

Aran Warnaar, COO of OnStream and a veteran of Philips, may become CEO.

Verbatim , which manufactured all the ADA cartridges, has officially stated that it will continue marketing the media.

Hope survives, since OnStream occupied a booth at CeBIT, and was furthermore a sponsor of the USA.

Pavilion, ironically, given that it has left the country.

The company even presented a new product, the ADR60ide, the first in a 2nd gen with 8 channels. The internal ATA drive, still based on 8mm longitudinal recording tape technology, has a native 30GB capacity with a native transfer rate varying from 0.5 and 3MB/s, and ensures backward read compatibility with current 15 and 25GB ADR cartridges. The unit, available in June, will costs €499, the media around €40. A 50GB version is also planned before the end of the year.

OnStream was launched only 3 years ago by Bill Beierwaltes, the former founder of Colorado Memory Systems, which he sold to HP in 1992. The company was a Philips spin-off that acquired DCC technology based on ADA drives.

The firm raised $50 million in financing in 1998 and $75 million in 1999, but attempts to drive a 3rd financial round did not pan out.

In addition to its top-heavy management, OnStream had the further disadvantage of positioning itself in the market, already in decline, of low-end tape drives.

Finally, the company did not succeed in signing the indispensable major OEM, even if it did come close to convincing Compaq and Dell.

This article is an abstract of news published on issue 160 on May 2001 from the former paper version of Computer Data Storage Newsletter.