Summary
EMC acquired Data Domain, a data deduplication company for $2.1 B in cash. EMC beat NetApp in the acquisition of Data Domain after several months of a bidding war. EMC says that it will integrate Data Domain as a division focused on the latest disk-based backup, recovery and archive products. NetApp needed a technology like Data Domains to give it a data deduplication capability to help the company remain competitive in the current economic climate.
Analysis
EMC won a three month long bidding war for data deduplication company, Data Domain, over rival bids from NetApp in July. NetApp’s prior offers had been a mix of cash and stock while EMC’s offer was all cash. Data deduplication, along with virtualization and several technologies for lowering the operating costs of storage systems are key technologies for continued sales of storage systems in the current economic environment.
Data deduplication, such as that offered by Data Domain, removes extra copies of data on storage devices allowing greater effective useful storage capacity using existing storage systems. This technology, combined with modern storage virtualization, allowing more flexible and dynamic provisioning of storage capacity to users depending upon their need give enterprises higher storage utilization, reduce the demand for new storage systems and also reduce operating costs as a consequence of higher utilization of existing assets.
EMC has data deduplication technology that it has offered its clients while NetApp did not have an integrated deduplication offering that could compete against that offered by EMC. Thus NetApp had the most to gain from acquiring data deduplication technology. EMC’s purchase of Data Domain comes as sort of a spoiler for NetApp. NetApp has responded that it will continue to pursue data deduplication technology development on its own.
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
