Normally I refrain from immediately jumping in the fray when major announcements occur in the storage industry. This is in part because much of the initial news is often speculation with insufficient facts to support any meaningful conclusions. However the announcement yesterday that EMC and not NetApp may be the likely acquirer of Data Domain is of a little bit different nature since the future of Data Domain has now been up in the air for a few weeks.
Up to this point, despite all of the hoopla congratulating NetApp for its shrewd acquisition in Data Domain, a positive outcome for either NetApp or Data Domain was anything but guaranteed. NetApp’s track record in regards to storage acquisitions over the last 5 – 10 years is pathetic at best and dismal at worst. About the only acquisition that you still hear NetApp make some noise about is its acquisition of Spinnaker Networks in 2003. Yet even after nearly 6 years, how well NetApp has been able to integrate Spinnaker’s technology within NetApp’s FAS storage systems is still incomplete at best as it still has to manage its ONTAP GX systems separately.
As to the rest of NetApp’s acquisitions – where are they now? Recent notable acquisitions include Decru, Onaro and Topio and you hear almost nothing about those product lines. One can certainly understand why you hear nothing about Topio (NetApp scuttled that acquisition this past December) whereas the other two can still be found on NetApp’s website as DataFort and SANscreen. How much success NetApp is having with these product lines is, again, unclear at best.
But as to why I think NetApp’s acquisition of Data Domain was a bad idea from the start had to with the fact that they sell competing products. Both NetApp and Data Domain offer deduplicating storage appliances that have NAS and VTL interfaces. Further, Data Domain has become a real thorn in NetApp’s side out in the field so if you can’t beat ’em, join ’em (or as the case may be for NetApp, acquire ’em).
So what would NetApp do with Data Domain’s technology after NetApp owned it? It seems everyone assumes that there would be group hugs all around and some have even suggested that NetApp would look to adopt Data Domain’s deduplication approach in lieu of its own. I suppose that’s possible but one only needs to remember NetApp’s management of Spinnaker’s technology to know that NetApp very much has an “Invented Here” mentality. I’m not trying to imply that this is a bad thing but it makes acquisitions of competing technologies such as Data Domain very difficult to integrate into the fold.
Even on the off chance that NetApp lets Data Domain continue to function as an independent business unit – where are the synergies? Granted, NetApp probably gets Data Domain into a greater number of accounts much faster but does it do so at the expense of its own solutions? Even then, NetApp now has to maintain a separate product line which, again, goes again the grain of its entire culture.
But now that EMC has entered the mix, its acquisition of Data Domain becomes interesting on a number of levels.
- First, even though EMC already uses VTL technologies from FalconStor and Quantum, it may not matter. My guess is that it keeps the other two in play for its enterprise accounts and leverages Data Domain in small and midsize enterprises or at the department level within enterprises where Data Domain leads anyway.
- Second, EMC is a master of selling a mix of everything storage where nothing really integrates nicely together. One only has to look at its Symmetrix, CLARiiON, Centera and Celerra lines to see that (just try to migrate data from one of these platforms to another without a third party software product – it’s difficult to do at best and impossible to do at worst). So the fact that EMC is already selling two other competing deduplication solutions probably doesn’t bother EMC in the least. In fact, knowing EMC, it probably sees it as now being in the position where its customers can choose from best of breed deduplication technologies and damn the integration and interoperability.
- Finally, Data Domain has great channel relationships whereas EMC has only a marginal channel presence. EMC could leverage that channel to compete more effectively against NetApp and continue to give customers a choice that they may eventually loose if NetApp acquires Data Domain.
Yet a question mark that looms is if an EMC acquisition of Data Domain would decimate the relationships that Data Domain has built with its channel partners over the years. EMC historically has not known how to manage the channel and may not enough with the Data Domain channel if it does acquire Data Domain. In this scenario, the big losers could be current Data Domain VARs and their customers.
So what’s going to happen in this continuing saga with Data Domain and who will eventually end up being its new owner? That is hard to say. But the big winners in this scenario (other than the Data Domain shareholders) look to be companies like Quantum and ExaGrid Systems. If the Data Domain channel gets thrown into a tizzy (and I just received a press release this morning that Data Domain’s Channel Sales Chief, Bill Cordero, has already joined Storwize), current Data Domain VARs may be looking for new relationships sooner rather than later and ExaGrid and Quantum are the best positioned to make these VARs happy.