This industry just keeps getting more interesting all the time. Today, EMC offered to acquire Data Domain in an all cash offer, beating Netapp's proposal by 20%.
Notes from the EMC call - posted live - during the call. (My comments are in Red and Italics)
Joe Tucci trying to explain how deduplication works. Not very smooth. He sounded like he was trying to say there were advantages of combining both Source and Target dedupe.
Its not likely that there would be any advantage from deduping data that has already been deduped.
Welcome Data Domain Employees! Here's your 5% paycut!
* * * * * *
First question: Why now? Isn't this expensive?
Tucci says EMC wants to own both Target and Source dedupe. Figures the company that can do both and integrate them will have an advantage.
I'd say that tech-wise this probably doesn't make sense, but market-wise it probably does. He didn't really answer the questions.
* * * * * *
Q2: what about Avamar - how does this reflect on them?
Tucci: The use cases for DDUP and Avamar are highly complimentary.
Maybe this also says that there are customers that don't want Avamar, but want another solution instead.
* * * * **
missed 3rd Q & A
* * * * * *
Q4: Would the DL4000 would be end of life?
Tucci: We think the DL4000 would continue to sell and there is a new version coming.
Q4b: How would sales force integration work?
Tucci: Need DDUP sales force and their expertise. Lots of ex-EMC at DDUP. Familiar with the EMC way and culture.
Some probably wouldn't go back to EMC.
* * * * * *
Q5: Use cases - and will there be primary storage dedupe (I think that was the question)
Tucci: Thinks there will be a way to get primary dedupe - answer wandered a bit.
* * * * * *
Q6: Why didn't EMC make a play sooner? What about employee reaction?
Tucci: Our track record in acquisitions in better than Netapp's. "Rhetoric is rhetoric" Our track record in acquisitions speaks for itself.
That makes it very clear - this is hostile directed at Netapp
* * * * * *
Q7: Have you spoken to Slootman at DDUP recently?
Tucci: No, not recently, their acquisition agreement with Netapp precludes that
* * * * *
Q8: missed question.
Tucci: Sees a big opportunity - a 10 BIllion market. EMC could have built it, but time to market was more important.
I don't think EMC could have built it.
* * * * * *
Q9: was this offensive or defensive in regards to Netapp? (Don't want Netapp to have DDUP)
Tucci: This is an offensive move.
* * * * * *
Q10: How much overlap is there today between Avamar and DDUP?
Tucci: Some have chosen Avamar and others DDUP - more have chosen DDUP. Avamar has been one of our top 3 acquisitions
* * * * * *
Q11: What was the run rate for Avamar versus DL products? DDUP has had an outsourced model using outsourced vendors - will you continue this or utilize Clariion?
Tucci: DDUP makes a gateway as well as their whole product. EMC can use both.
* * * * * *
My Call Summary
While EMC says this is an offensive move, but it sure seems like a defensive move to me in order to to keep Netapp from cornering the dedupe market. The way these deals tend to go is that multiple companies are in "on the bidding" (in private) and that EMC and Netapp were both involved up until a little more than a week or so. Netapp probably prevailed and announced their "win" last week.
EMC now has had a chance to regroup after EMC World and now has loser's remorse - so bad that they are willing to pay an enormous premium for a company that was already offered a premium price by Netapp. Good for DDUP and more power to 'em! My guess is that EMC looked at their own dedupe products and realized that they could see their own products getting killed by the Netapp/DDUP combination. Apparently EMC views dedupe as strategic and they saw a failure in their strategy passing before their eyes. They really should have taken care of business earlier rather than playing chicken with Netapp and DDUP.
Last year Chuck Hollis wrote about how Dedupe was a feature and not a product. My opinion at the time was that dedupe is a feature unless your integrated feature isn't very good, then you might need a specialized product. It doesn't look like EMC believes dedupe is a feature anymore.
This deal is a long ways from being over and should provide great entertainment for all storage geeks over the weeks to come.
Marc-
Couldn't agree more. This was a purely defensive move- They realized that NetApp was cornering what they call the 'storage efficiency' market, while EMC was nowhere.
Posted by: Just a Storage Guy | June 01, 2009 at 05:39 PM
Marc,
100% in agreement with your analysis summary.
Looking forward to NetApp's next move in this chess match.
Posted by: Geoff Mitchell | June 02, 2009 at 06:16 AM
That's just wacky. If EMC ends up with Data Domain I hope they choke on it. Wait a minute what am I saying (DD customer)?
Posted by: Chris Fricke | June 02, 2009 at 06:03 PM