The cost of poor RAID product sales and insufficient UDO earnings has been born by Plasmon CEO Nigel Street. He has resigned and been replaced by interim CEO Rod Powell of Hanover Investors. That company took a 24 percent stake in Cambridge (UK)-based Plasmon earlier this year.

In its recent first half results statements Plasmon announced a loss of £6 million on revenues of £18.6 million, down 7 percent, compared to a £4.3 million loss last year. The board, under its chairman Jeffrey Hewitt, who became chairman in July, 2006, decided enough was enough.

The problem has been product transitions. The leading optical storage product line, UDO with second generation UDO2 recently launched, has not raised revenues enough to cover up the falling earnings of the Raidtec product line. Plasmon, under Street, decided that the US market was key. Raidtec sales were being made into a hotly-contested and commoditised market against competition with deeper pockets and stronger brands. There is no great future there.

UDO sales were rising. The second generation UDO 2 product had been launched and received well.

The only sensible threat to UDO products as a main optical archival data storage medium is holography with InPhase and its Tapestry product. However its 300GB drives and disk are expensive and I/O speeds relatively slow. They should improve but that gives Plasmon with UDO, its window of opportunity.

Both Blu-ray and HD-DVD are struggling as commercial optical storage platforms because of their consumer format competition, utterly reminiscent of the Betamax-VHS market battle. Until a winner is declared market leadership is denied. (Plasmon's group technical director, Bob Longman, discussed competing optical formats here.)

Nigel Street led Plasmon during UDO development and the bringing to market of both its first and second-generations. He became Plasmon's CEO in September, 1997, and has thus spent ten years in the position. Plasmon has achieved amazing things, being one of the UK's IT technology jewels. The development of UDO when the earlier magneto-optical (MO) format was running out of steam, against a background of Japanese optical heavyweights jumping into Blu-ray and HD-DVD development, demonstrated both courage and conviction in Plasmon's own technical prowess.

UDO leads the optical archival storage market. There is nothing else with its 50-year lifespan and UDO 2's 60GB capacity and read/write speed. The roadmap extends out to 120GB UDO 3 and 240GB UDO 4. A threat is not holographic storage but the general rise (and rise) of disk as a replacement for both tape and optical archive data storage. Disk gives faster access than offline media. However the drive to lower IT energy costs could put an obstacle in the way of online disk-based archives.

The key for Plasmon is selling enough of its UDO product before holography presents serious competition and before online disk archives can become real competition too. The big market is the USA; that is the key to Plasmon's immediate fortunes. There, Plasmon's sales and marketing organisation, managed by SVP Mike Koclanes, has had investment pumped into it. Plasmon's board change statement makes much of interim CEO Rod Powell's US experience, also of his skills in low-cost manufacturing. Clearly the company does not want to lose way in the USA whilst the search for a permanent CEO gets under way. It may though want to examine its manufacturing arrangements and see if cheaper locations could be found.

It is to be strongly hoped that Plasmon's new management preserves Plasmon's optical storage technology expertise. If an axe is to be taken to costly and under-performing assets then Raidtec and Blu-ray/HD-DVD activities would be preferred targets for the axeman.

Street remains a director until the mid-July AGM at which time more results information will be revealed. To have news of a new CEO then is probably more than can be hoped for.