Is Quantum shopping itself around?
Saucy firm undoes top button, eyes NetApp provocatively?
NetApp could buy Quantum
The Motley Fool investing website has floated the idea of NetApp buying Quantum. Is this a completely off-the-wall idea?
The article mentions new Quantum CEO Jon Gacek's mergers and acquisitions experience at previous employer PWC. Quantum also recently appointed David Roberson to its board. He is one of the storage world's "Great and Good", having been HDS CEO and then running StorageWorks for HP where he was involved in the acquisitions of LeftHand Networks, IBRIX and 3PAR.
It begins to look as if Quantum, financially healthier than it has been for a long time, might be considering an acquisition or possibly shopping itself around.
The plus points for a NetApp buy of Quantum might be:
- NetApp can return to the virtual tape library (VTL) market which it exited after losing Data Domain to EMC. It currently has a European reseller agreement with Fujitsu to resell its CentricStor library which, ironically, uses the Quantum DXi deduplication software.
- NetApp would gain the DXi deduplication software which is a stronger technology than its own A-SIS deduplication.
- It would get the StorNext file management virtualisation software, which it is currently reselling.
- It would become a tape automation supplier which would provide NetApp with a substantial differentiating factor from EMC. With a hoped-for Quantum high-end library NetApp could compete against IBM, Oracle and SpectraLogic for petabyte and exabyte-scale data archives.
Gacek also said: "It's impossible for EMC to think about tape as being part of the solution. But most end users that are thinking cost-effectiveness, they're thinking about how to integrate with their current processes, there is a role for tape, and that's a huge differentiator for us."
- It would become a member of the LTO consortium alongside HP and IBM. Regarding tape, Gacek said: "We think tape is here for a while. As a recollection, we make a lot of money on tape. And we think we'll continue to drive profits there… The role of tape for sure is changing in backup, but there is still this long-term archive and data retention requirement that tape is very well-suited for."
- NetApp margins would increase as it is a disk shelf supplier to Quantum for the DXi 8500 via Engenio.
- The NetApp channel could boost Quantum product sales.
The potential downsides could be:
- Quantum is currently a low-growth company overall, and needs a strategy for growth.
- High-end tape automation may not be popular in cloud data centres and become a revenue loser as NetApp fails to take market share away from the incumbents.
- StorNext fails to take off.
Were NetApp to think it worthwhile then Quantum, capitalised at $707.8m, and with $78m in cash, would be affordable for NetApp and, bearing Data Domain memories in mind, there is unlikely to be a bidding war.
We have not heard anything from sources about a possible NetApp-Quantum deal, nor about Quantum either looking to buy other companies or wanting to be bought itself.
This is all speculation, but it could be that NetApp and Quantum are thinking along the same lines. ®
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