Feeds

Dedupe this: NetApp buying Data Domain

Surprise deal obscures good results

Remote control for virtualized desktops

Comment Announcing its intent to be king of the dedupe hill, NetApp is buying Data Domain for $1.5bn. The announcement overshadowed NetApp's fiscal 2009 earnings which beat Wall Street estimates.

The IT world has been agog with rumours of a big takeover, Cisco and EMC being often mentioned, but Data Domain and NetApp was an unexpected pairing. Neither company is weak or in trouble and neither is known to be boldly acquisitive. Yet NetApp has struck a strong and decisive deal with Data Domain: a somewhat out-of-character deal given its track record of buying technology to be integrated into its existing offerings, with the exception of Decru.

The most recent Data Domain earnings showed revenues up 50 per cent year-on-year and 7 percent sequentially. It made a profit too, showing it was capable of growth in the midst of the recession. It is certainly no financial basket case.

Data Domain is the energetic leader of the deduplication market, powering its inline deduping technology with Intel processors and intent on becoming a storage platform company in its own right, or so we thought. It has a strong line of products which it has sold vigorously, but with two perceived weaknesses. So far it has no answer to Ocarina's content-aware compression, the ability to dedupe graphic images and videos such as JPEG and MPEG files that traditional dedupe can't touch. Secondly Data Domain has yet to cluster its boxes together and so scale out.

Competitors such as Sepaton and Exagrid can cluster their deduping boxes and so offer greater scale than Data Domain. This is a capability that many expected Data Domain to deliver, after it has introduced Nehalem-based controllers.

NetApp is paying about $25/share, a 40 percent premium when the deal was announced yesterday. There is an $11.45 cash plus 0.75 NetApp shares for each Data Domain share. The deal is expected to close in 60 - 120 days, with NetApp gaining increased earnings in its fiscal 2010.

NetApp motivations

NetApp says it is buying because the two businesses are complementary, Data Domain's boxes being used to deduplicate files backed up to disk, and not competing with NetApp's FAS lines of online file and block storage. Data Domain will be able to grow its international sales faster by going through NetApp's European and Asia/Pacific distributors and resellers than by growing its own international channels.

There is overlap with NetApp's existing VTL (Virtual Tape Library) line but that will be sorted out. NetApp isn't saying anything specific about this or Data Domain's roadmap or staffing, other than to affirm broad commitment to the roadmap and to the principle of keeping Data Domain as a growing and profitable business run as a relatively independent operation. We might imagine that NetApp's own VTL product line developments are now on hold and that the line is facing practical end of life, with due arrangements for replacement products, support and other considerations yet to be made.

NetApp must have decided that it is cheaper to buy its way to dedupe product success than to continue to develop its own deduping VTL product line.

Alacritus was bought by NetApp in April, 2005, for its virtual tape library technology, and resulted in the separate VTL product line, it not being integrated into ONTAP. We might take the view that NetApp is effectively replacing that technology four years later with Data Domain's.

Remote control for virtualized desktops

More from The Register

next story
Azure TITSUP caused by INFINITE LOOP
Fat fingered geo-block kept Aussies in the dark
729 teraflops, 71,000-core Super cost just US$5,500 to build
Cloud doubters, this isn't going to be your best day
Want to STUFF Facebook with blatant ADVERTISING? Fine! But you must PAY
Pony up or push off, Zuck tells social marketeers
Oi, Europe! Tell US feds to GTFO of our servers, say Microsoft and pals
By writing a really angry letter about how it's harming our cloud business, ta
You think the CLOUD's insecure? It's BETTER than UK.GOV's DATA CENTRES
We don't even know where some of them ARE – Maude
SAVE ME, NASA system builder, from my DEAD WORKSTATION
Anal-retentive hardware nerd in paws-on workstation crisis
Astro-boffins start opening universe simulation data
Got a supercomputer? Want to simulate a universe? Here you go
prev story

Whitepapers

Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Reducing the cost and complexity of web vulnerability management
How using vulnerability assessments to identify exploitable weaknesses and take corrective action can reduce the risk of hackers finding your site and attacking it.
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.