Imation is investing $20 million in Exabyte and getting exclusive world-wide marketing rights for Exabyte brand media products. Imation is buying less than five per cent of Exabyte's equity. Exabyte will sell all of its media products exclusively to Imation. These are for Mammoth technology, now on a maintenance basis, and for Exabyte's VXA-1 and VXA-2 technologies.

Exabyte is actively developing VXA technology and has recently announced its ten-cartridge PacketLoader. The VXA roadmap has two further generations in it taking capacity out to 160GB and 329GB native over the next three or so years.

"Adding the Exabyte VXA line to our portfolio is a powerful statement of our commitment to invest in profitable growth opportunities, and we expect it to be accretive," said Frank Russomanno, president, Imation's data storage and information management business. Imation reckons its distribution chain can enhance Exabyte's global coverage. There has been some questioning of Exabyte's viability in the light of the strong competition in this area of the tape market with competition from Quantum (VS80), Tandberg (SLR), HP/Certance (DDS5) and Sony (AIT). ADR supplier ONStream, also in this market area, went bankrupt for the second time earlier this year.

"Our relationship with Imation represents a major vote of confidence for the exciting opportunity we all see for VXA technology and the future of Exabyte," said Tom Ward, Exabyte president and CEO. "The Imation investment clearly validates the VXA format, provides capital for future product development and will help secure the VXA roadmap." The acceptance of Exabyte's VXA Packet Technology by VARs and OEMs, such as IBM's selection of VXA-2 Packet Drives for its eServer lines - pSeries, iSeries and xSeries - was a key motivator that brought Imation and Exabyte together. During the last 14 months, Exabyte has signed nine new OEM agreements and enrolled more than 700 new resellers for its VXA products. This is a significant and welcome vote of confidence in Exabyte which has possibly secured its VXA roadmap. Also Imation's transition to more than just a media supplier takes another step forward.