July 13, 2009 – Now that the bidding battle for Data Domain is over, with EMC set to lay out a whopping $2.1 billion, the question is: What’s next?
To get the opinions of analysts such as the Enterprise Strategy Group’s Steve Duplessie and Wikibon.org’s Dave Vellante, check out senior editor Kevin Komiega’s blog post, “Is Data Domain a good fit for EMC?”
I draw two conclusions from this saga:
--EMC paid way too much
--NetApp did the right thing
I thought the original bid of $1.5 billion was too high, but $2.1 billion for a data deduplication vendor?? With some vendors giving away deduplication for free (most notably, EMC and NetApp) users’ expectations re the cost of deduplication are going down. I’m told that a Data Domain implementation can get real costly real quickly, but even EMC won’t be able to keep those margins up over the long run. As such, EMC’s ROI for Data Domain appears questionable. And that’s a lot of money to pay just to keep a technology out of a competitor’s hands. EMC may appear to be victorious, but it’s a Pyrrhic victory at best.
NetApp officials did the right thing by ditching their egos and walking away from the bidding war. In fact, you could almost argue that NetApp is the victor in this battle.
So what’s next for NetApp? The conventional wisdom is that the company must make acquisitions – particularly on the software front – to round out its IT stack and stay competitive with EMC, IBM, HP, etc. And if you cruise the blogs you’ll find that acquisition speculation tends to focus on vendors such as CommVault, FalconStor, etc. and primary storage optimization vendors such as Ocarina. That assumes that NetApp is as dizzy over dedupe as it appears to be.
My guess is that NetApp will resume its acquisition attempts, but not in the deduplication arena. I think we’re in for some more surprises, and probably in the near future.
And in unrelated news . . .
Also last week, Broadcom appears to have dropped its hostile takeover bid for Emulex after getting rebuffed yet again on its sweetened offer. Something tells me this one isn’t over yet. Broadcom needs Fibre Channel – or at least Fibre Channel over Ethernet – technology, and Emulex isn’t the only Fibre Channel expert in the OC.
Showing posts with label Data Domain. Show all posts
Showing posts with label Data Domain. Show all posts
Monday, July 13, 2009
Tuesday, June 9, 2009
Tucci woos Data Domain employees
June 9, 2009 – Maybe I spoke too soon in my last post about the fate of Data Domain when I opined that it was a done deal and that the dedupe darling would go to NetApp in spite of EMC’s bid (see “Stick a fork in Data Domain” ).
I speculated that NetApp would win out because (a) Data Domain is a better fit for NetApp than it is for EMC and (b) NetApp’s and EMC’s offers were the same: $30 per share. Not true. EMC’s is an all-cash offer and NetApp’s is a combination of stock and cash. And therein lies the reason why EMC could win: If you were a Data Domain shareholder, wouldn’t you want the all-cash deal?
Of course, there’s still the possibility of EMC or NetApp upping the offer, and investors seem to think that’s what will happen. (Data Domain shares closed at $32.58 today, virtually unchanged from last Friday.) Or NetApp could switch to an all-cash offer.
The latest development in this saga: Today, EMC chairman, president and CEO Joe Tucci sent an open letter to Data Domain’s employees (note: employees, not shareholders) trying to woo them over.
You can get additional details at EMC’s site, but here’s the text of the letter:
An Open Letter to the Employees of Data Domain
We at EMC have the highest regard for the people of Data Domain. You have built a terrific company. We know this because we have closely followed your fast-paced growth and progress for years. We understand the contributions your deduplication technologies and solutions are making to companies around the world. You have a well-earned reputation for attracting skilled storage professionals who excel at innovation. And we admire how uncompromising you are in caring for and serving your customers. In many ways, you remind us of EMC.
For these reasons and many more, we believe that bringing Data Domain into the EMC family would be the best way for you to continue building your careers and accelerating the success you've already achieved in the marketplace.
As you know, your Board of Directors has a fiduciary responsibility to do what is in the best long-term interests of Data Domain's stockholders. Looked at purely from a financial perspective, EMC's $30 per share all-cash tender offer to acquire all of the outstanding stock of Data Domain remains superior to NetApp's part-stock, part-cash offer. But of course there's more to the success of a merger than money can ever account for.
Therefore, we imagine that you must be asking yourselves, what kind of future could I expect to have as a member of the global EMC family? The short answer is a great and exciting future-and here's why:
For starters, EMC is a lot more than just the worldwide market and technology leader in storing, managing, protecting, and securing information-or, as we describe it, information infrastructure. We are also a company that truly knows how to acquire companies that have become leaders in their market segments, integrate them smoothly and successfully, and then empower them to excel. We have learned by doing, and our track record is considerable. For example, over the past six years in the Silicon Valley area alone, we have acquired 11 companies, and today we have about 6,000 employees in the region. We are very mindful of culture-respecting and preserving the various cultures that made the companies we acquired successful in the first place. In nearly every instance, after joining EMC, these businesses have grown faster, advanced the development of their technologies more rapidly, reached more customers, and provided greater career opportunities for their people than they had been able to do on their own.
One reason we've been successful is that EMC does not just have one culture but many, with common characteristics like respect, commitment to customers, and passion for innovation and winning. EMC doesn't acquire to consolidate. We acquire growth companies with great people and innovative technologies, and we invest in accelerating their success while their cultures continue to grow and develop. Many of the people in these companies have gone on to leadership positions in EMC, and we would expect the same potential from the talented people at Data Domain.
Our plan is to keep the people and products of Data Domain intact and operate your company as a product division within EMC. Your target-based deduplication technologies are important to the future of enterprise IT. We plan to invest in Data Domain and grow the business and the innovation even more aggressively because of our broader global reach and size.
How would you as an individual and your company benefit from EMC's resources and commitment to leadership? Not only are we deeply committed to our people and their development, we also have by far the largest storage-focused R&D budget in all of IT, which ensures a product-development pace that enables us to derive the vast majority of our revenues from products that are less than 18 months old. We are a truly global company offering opportunities for international experience, as nearly half of our employees work outside the U.S. We have consistently been ranked among the top global companies for training and development. We have a global sales and marketing organization of about 9,000 people in more than 400 locations around the world, complemented by a partner ecosystem that amplifies our strength, value proposition, and market reach. And we have ample cash and a very strong balance sheet to fund an exciting future.
Our collection of considerable strengths-along with our proven experience in successfully acquiring companies and empowering them to greater heights-should provide assurance that EMC can grow and develop Data Domain more rapidly and effectively than NetApp can.
At the end of the day, companies are really about people-committed, talented, passionate people who want to be challenged, who want to invent and create, do something meaningful and lasting, realize their full potential, make a positive impact on their communities and the world, and have fun doing it. That's exactly what EMC is about. The people of EMC are passionate individuals who get involved and make a difference in the lives of our customers and our communities every day. We stand for putting our customers first, treating people with respect, collaborating smoothly with our colleagues and partners, thinking creatively to solve problems, leveraging our diversity, and maintaining a fully inclusive workforce. And we stand ready to welcome the talented people of Data Domain to EMC with open arms.
Joe Tucci
Chairman, President, and CEO
EMC
I guess EMC is serious about this deal after all.
I speculated that NetApp would win out because (a) Data Domain is a better fit for NetApp than it is for EMC and (b) NetApp’s and EMC’s offers were the same: $30 per share. Not true. EMC’s is an all-cash offer and NetApp’s is a combination of stock and cash. And therein lies the reason why EMC could win: If you were a Data Domain shareholder, wouldn’t you want the all-cash deal?
Of course, there’s still the possibility of EMC or NetApp upping the offer, and investors seem to think that’s what will happen. (Data Domain shares closed at $32.58 today, virtually unchanged from last Friday.) Or NetApp could switch to an all-cash offer.
The latest development in this saga: Today, EMC chairman, president and CEO Joe Tucci sent an open letter to Data Domain’s employees (note: employees, not shareholders) trying to woo them over.
You can get additional details at EMC’s site, but here’s the text of the letter:
An Open Letter to the Employees of Data Domain
We at EMC have the highest regard for the people of Data Domain. You have built a terrific company. We know this because we have closely followed your fast-paced growth and progress for years. We understand the contributions your deduplication technologies and solutions are making to companies around the world. You have a well-earned reputation for attracting skilled storage professionals who excel at innovation. And we admire how uncompromising you are in caring for and serving your customers. In many ways, you remind us of EMC.
For these reasons and many more, we believe that bringing Data Domain into the EMC family would be the best way for you to continue building your careers and accelerating the success you've already achieved in the marketplace.
As you know, your Board of Directors has a fiduciary responsibility to do what is in the best long-term interests of Data Domain's stockholders. Looked at purely from a financial perspective, EMC's $30 per share all-cash tender offer to acquire all of the outstanding stock of Data Domain remains superior to NetApp's part-stock, part-cash offer. But of course there's more to the success of a merger than money can ever account for.
Therefore, we imagine that you must be asking yourselves, what kind of future could I expect to have as a member of the global EMC family? The short answer is a great and exciting future-and here's why:
For starters, EMC is a lot more than just the worldwide market and technology leader in storing, managing, protecting, and securing information-or, as we describe it, information infrastructure. We are also a company that truly knows how to acquire companies that have become leaders in their market segments, integrate them smoothly and successfully, and then empower them to excel. We have learned by doing, and our track record is considerable. For example, over the past six years in the Silicon Valley area alone, we have acquired 11 companies, and today we have about 6,000 employees in the region. We are very mindful of culture-respecting and preserving the various cultures that made the companies we acquired successful in the first place. In nearly every instance, after joining EMC, these businesses have grown faster, advanced the development of their technologies more rapidly, reached more customers, and provided greater career opportunities for their people than they had been able to do on their own.
One reason we've been successful is that EMC does not just have one culture but many, with common characteristics like respect, commitment to customers, and passion for innovation and winning. EMC doesn't acquire to consolidate. We acquire growth companies with great people and innovative technologies, and we invest in accelerating their success while their cultures continue to grow and develop. Many of the people in these companies have gone on to leadership positions in EMC, and we would expect the same potential from the talented people at Data Domain.
Our plan is to keep the people and products of Data Domain intact and operate your company as a product division within EMC. Your target-based deduplication technologies are important to the future of enterprise IT. We plan to invest in Data Domain and grow the business and the innovation even more aggressively because of our broader global reach and size.
How would you as an individual and your company benefit from EMC's resources and commitment to leadership? Not only are we deeply committed to our people and their development, we also have by far the largest storage-focused R&D budget in all of IT, which ensures a product-development pace that enables us to derive the vast majority of our revenues from products that are less than 18 months old. We are a truly global company offering opportunities for international experience, as nearly half of our employees work outside the U.S. We have consistently been ranked among the top global companies for training and development. We have a global sales and marketing organization of about 9,000 people in more than 400 locations around the world, complemented by a partner ecosystem that amplifies our strength, value proposition, and market reach. And we have ample cash and a very strong balance sheet to fund an exciting future.
Our collection of considerable strengths-along with our proven experience in successfully acquiring companies and empowering them to greater heights-should provide assurance that EMC can grow and develop Data Domain more rapidly and effectively than NetApp can.
At the end of the day, companies are really about people-committed, talented, passionate people who want to be challenged, who want to invent and create, do something meaningful and lasting, realize their full potential, make a positive impact on their communities and the world, and have fun doing it. That's exactly what EMC is about. The people of EMC are passionate individuals who get involved and make a difference in the lives of our customers and our communities every day. We stand for putting our customers first, treating people with respect, collaborating smoothly with our colleagues and partners, thinking creatively to solve problems, leveraging our diversity, and maintaining a fully inclusive workforce. And we stand ready to welcome the talented people of Data Domain to EMC with open arms.
Joe Tucci
Chairman, President, and CEO
EMC
I guess EMC is serious about this deal after all.
Friday, June 5, 2009
Stick a fork in Data Domain
June 5, 2009 – Ah, the perils of blogging about an unfolding story. In case you missed it, data duplication darling Data Domain appears to have accepted NetApp’s revised acquisition offer, following EMC’s hostile bid, which followed NetApp’s original bid. See Kevin Komiega’s blog, “Data Domain sides with NetApp,” for the latest news on this intriguing saga.
For reasons that aren’t entirely clear to me, both suitors are offering $30 per share yet NetApp’s deal has been valued at $1.9 billion and EMC’s was valued at $1.8 billion. I guess that has to do with the fact that NetApp’s is a cash-and-stock deal and EMC’s is a pure-cash deal. Which also explains why EMC honcho Joe Tucci considers his company’s bid to be “superior” to NetApp’s.
I think the saga is over, with Data Domain going to NetApp, but some financial gurus think EMC will up the bid even higher or, less likely, that a third suitor (Hitachi?) will appear.
The continuing surge in Data Domain’s stock price – to $32.51 today – suggests that investors expect an even higher bid, presumably from EMC.
Some bloggers have speculated that EMC never really wanted Data Domain, and that EMC made its offer just to drive the acquisition price up and stick it to NetApp. Does anybody really think that EMC is that frivolous? On the other hand, does EMC really need yet another deduplication option?
One problem with scenarios like this is that they set the blogging world on fire, with rampant guessing on what EMC (or NetApp) will do if it loses, or drops out of, the bidding war. Acquire another deduplication vendor? (FalconStor? Ocarina? Storwize?). I doubt it.
What has me scratching my head is the size of this deal: almost $2 billion (or more if the bidding war continues) for a technology that is a feature, not a market. Not to mention a feature that some vendors (NetApp and EMC) give away for free. How much margin will there be in this space once users expect the technology for free, or at least very inexpensively?
And just how popular is data deduplication? Sure, I’ve read all the (vendor commissioned) surveys that suggest that deduplication is the hottest technology in the storage market.
However, consider this: Apptio, which provides IT cost-optimization services among other things, is about to release the results of an end-user survey that says that storage is the next place IT organizations will analyze for cost savings. About 38% of Apptio’s customers are looking to reduce storage-related costs (which seems to me like an awfully low percentage). Of those companies:
--Almost 80% are analyzing tiered storage
--43% are analyzing low-cost archiving and backup options, including cloud storage
--And only 15% are considering data deduplication
According to Apptio’s PR agency, the company will be posting the full results of the survey on its Lean IT blog in the next week or so.
For reasons that aren’t entirely clear to me, both suitors are offering $30 per share yet NetApp’s deal has been valued at $1.9 billion and EMC’s was valued at $1.8 billion. I guess that has to do with the fact that NetApp’s is a cash-and-stock deal and EMC’s is a pure-cash deal. Which also explains why EMC honcho Joe Tucci considers his company’s bid to be “superior” to NetApp’s.
I think the saga is over, with Data Domain going to NetApp, but some financial gurus think EMC will up the bid even higher or, less likely, that a third suitor (Hitachi?) will appear.
The continuing surge in Data Domain’s stock price – to $32.51 today – suggests that investors expect an even higher bid, presumably from EMC.
Some bloggers have speculated that EMC never really wanted Data Domain, and that EMC made its offer just to drive the acquisition price up and stick it to NetApp. Does anybody really think that EMC is that frivolous? On the other hand, does EMC really need yet another deduplication option?
One problem with scenarios like this is that they set the blogging world on fire, with rampant guessing on what EMC (or NetApp) will do if it loses, or drops out of, the bidding war. Acquire another deduplication vendor? (FalconStor? Ocarina? Storwize?). I doubt it.
What has me scratching my head is the size of this deal: almost $2 billion (or more if the bidding war continues) for a technology that is a feature, not a market. Not to mention a feature that some vendors (NetApp and EMC) give away for free. How much margin will there be in this space once users expect the technology for free, or at least very inexpensively?
And just how popular is data deduplication? Sure, I’ve read all the (vendor commissioned) surveys that suggest that deduplication is the hottest technology in the storage market.
However, consider this: Apptio, which provides IT cost-optimization services among other things, is about to release the results of an end-user survey that says that storage is the next place IT organizations will analyze for cost savings. About 38% of Apptio’s customers are looking to reduce storage-related costs (which seems to me like an awfully low percentage). Of those companies:
--Almost 80% are analyzing tiered storage
--43% are analyzing low-cost archiving and backup options, including cloud storage
--And only 15% are considering data deduplication
According to Apptio’s PR agency, the company will be posting the full results of the survey on its Lean IT blog in the next week or so.
Tuesday, May 26, 2009
NetApp + Data Domain: Overlap is ok
May 26, 2009 – Even after a long holiday weekend, the industry continues to debate the wisdom and ramifications of NetApp’s proposed acquisition of Data Domain. For our news coverage, see “NetApp shells out $1.5 billion for Data Domain.” And for reaction from analysts and competitors, see Kevin Komiega’s blog post, “NetApp’s competitors take aim at Data Domain deal.”
I agree with the general consensus that, in today’s economy, NetApp may have overpaid. (The buyout price was $25 per share, about a 40% premium over Data Domain’s closing price prior to the announcement.) But I disagree with some of the other commentary.
For example, some analysts, such as Wikibon.org’s David Vellante, predict that the “vision will take forever to execute.” If this was the same technological hurdle that NetApp faced with its acquisition of, say, Spinnaker, I’d agree. But it isn’t. In fact, they don’t even have to integrate the NetApp and Data Domain deduplication technologies.
Which brings me to another commentary on the deal; namely, that there’s overlap between the two vendors’ data-reduction product lines. Yes, there’s overlap, but that doesn’t mean that NetApp will have to jettison any products.
In the classic situation of product overlap after an acquisition, the conventional wisdom is to eliminate the overlap. But in this case it’s just another option for customers. In the case of data reduction for secondary or nearline storage, customers can opt for NetApp’s free dedeuplication technology, or, if they want higher performance or reduction ratios they can pay for the Data Domain technology. NetApp wins either way.
I don’t see any reason to kill product lines, so the product overlap objection seems to be a moot point. In fact, customers won’t even have to choose between the two product lines because they can be used in conjunction with each other.
Obviously, NetApp has to continue to branch out if it wants to be competitive with EMC, IBM, etc. What’s debatable is whether data deduplication (or data reduction in general) is a significant technology in the larger IT battle. I don’t think it is (because, as many have observed, it’s a feature and not a market), but to the degree that NetApp is right – that data deduplication is a linchpin technology -- the Data Domain deal is a good strategic move.
I agree with the general consensus that, in today’s economy, NetApp may have overpaid. (The buyout price was $25 per share, about a 40% premium over Data Domain’s closing price prior to the announcement.) But I disagree with some of the other commentary.
For example, some analysts, such as Wikibon.org’s David Vellante, predict that the “vision will take forever to execute.” If this was the same technological hurdle that NetApp faced with its acquisition of, say, Spinnaker, I’d agree. But it isn’t. In fact, they don’t even have to integrate the NetApp and Data Domain deduplication technologies.
Which brings me to another commentary on the deal; namely, that there’s overlap between the two vendors’ data-reduction product lines. Yes, there’s overlap, but that doesn’t mean that NetApp will have to jettison any products.
In the classic situation of product overlap after an acquisition, the conventional wisdom is to eliminate the overlap. But in this case it’s just another option for customers. In the case of data reduction for secondary or nearline storage, customers can opt for NetApp’s free dedeuplication technology, or, if they want higher performance or reduction ratios they can pay for the Data Domain technology. NetApp wins either way.
I don’t see any reason to kill product lines, so the product overlap objection seems to be a moot point. In fact, customers won’t even have to choose between the two product lines because they can be used in conjunction with each other.
Obviously, NetApp has to continue to branch out if it wants to be competitive with EMC, IBM, etc. What’s debatable is whether data deduplication (or data reduction in general) is a significant technology in the larger IT battle. I don’t think it is (because, as many have observed, it’s a feature and not a market), but to the degree that NetApp is right – that data deduplication is a linchpin technology -- the Data Domain deal is a good strategic move.
Monday, April 20, 2009
Q1 the worst ever for VARs
April 20, 2009 – The channel bid adieu to the first quarter of this year with a collective “good riddance.” That’s one takeaway from a recent survey of 51 IT resellers conducted by Robert W. Baird & Co.
How bad was it? In terms of expected revenues vs. actual revenues, 60% of the VARs were below plan, 26% were on plan, and only 14% were above plan. That’s the worst quarter since RW Baird began its quarterly server/storage VAR surveys in Q3 2004. In fact, it was almost twice as bad as the previous worst quarters (Q2 2006 and Q1 2008, when about 32% of the resellers were below plan).
Once again, storage was cited as the strongest IT sector by resellers, with virtualization and data de-duplication cited as the hottest technologies.
It’s tough to predict how VARs will fare in the second quarter. About 43% of the survey respondents expect the market to remain about the same, while 30% are more negative and 16% are more positive (and 11% say it’s too early to tell). On the positive side, many VARs said that, although many purchases were delayed from Q1 to Q2, relatively few purchases were cancelled.
When asked which vendors’ products they expect to sell more of in the next 12 months, VARs cited VMware, NetApp, Data Domain and Cisco as the top four performers, with CommVault and LeftHand rounding out the top six.
When asked about specific vendors in the short term (“How do you perceive the following storage vendors in the next 3 to 6 months?”), Data Domain, NetApp and EMC topped the list, with LeftHand moving into the fourth position from seventh in the previous quarter. (LeftHand was also ranked the most channel friendly vendor, slightly above NetApp.)
Sun ranked consistently low in the survey, and it will be interesting to see how the channel reacts to the Oracle-Sun announcement. I”ll blog about that news as soon as I get done scratching my head.
How bad was it? In terms of expected revenues vs. actual revenues, 60% of the VARs were below plan, 26% were on plan, and only 14% were above plan. That’s the worst quarter since RW Baird began its quarterly server/storage VAR surveys in Q3 2004. In fact, it was almost twice as bad as the previous worst quarters (Q2 2006 and Q1 2008, when about 32% of the resellers were below plan).
Once again, storage was cited as the strongest IT sector by resellers, with virtualization and data de-duplication cited as the hottest technologies.
It’s tough to predict how VARs will fare in the second quarter. About 43% of the survey respondents expect the market to remain about the same, while 30% are more negative and 16% are more positive (and 11% say it’s too early to tell). On the positive side, many VARs said that, although many purchases were delayed from Q1 to Q2, relatively few purchases were cancelled.
When asked which vendors’ products they expect to sell more of in the next 12 months, VARs cited VMware, NetApp, Data Domain and Cisco as the top four performers, with CommVault and LeftHand rounding out the top six.
When asked about specific vendors in the short term (“How do you perceive the following storage vendors in the next 3 to 6 months?”), Data Domain, NetApp and EMC topped the list, with LeftHand moving into the fourth position from seventh in the previous quarter. (LeftHand was also ranked the most channel friendly vendor, slightly above NetApp.)
Sun ranked consistently low in the survey, and it will be interesting to see how the channel reacts to the Oracle-Sun announcement. I”ll blog about that news as soon as I get done scratching my head.
Tuesday, February 3, 2009
Consider data de-duplication plus compression
Data de-duplication gets a lot of ink and engenders a lot of debates, but the option of combining data de-dupe with real-time compression on primary storage is rarely discussed, maybe because there aren’t many vendors targeting compression for primary storage resources.
That’s what Storwize specializes in, and the company recently released the results of tests that suggest a serious look at combining de-duplication with data compression to further enhance overall data reduction.
Storwize claims that adding real-time compression can improve data reduction by more than 200%, based on its internal testing as well as customer deployments. (In the internal tests, Storwize used data de-duplication solutions from both Data Domain and NetApp.)
Storwize positions data de-duplication as being particularly advantageous for highly redundant backup data sets, but points out that using real-time data compression on the front end (primary storage devices) can significantly reduce de-duplication processing time and enhance throughput, in addition to reducing overall capacity requirements.
To assess the validity of the test results, check them out here
And if you’re among the early adopters of data compression on primary storage, respond below or email me at daves@pennwell.com and let me know what types of real-life data compression ratios you’re getting.
That’s what Storwize specializes in, and the company recently released the results of tests that suggest a serious look at combining de-duplication with data compression to further enhance overall data reduction.
Storwize claims that adding real-time compression can improve data reduction by more than 200%, based on its internal testing as well as customer deployments. (In the internal tests, Storwize used data de-duplication solutions from both Data Domain and NetApp.)
Storwize positions data de-duplication as being particularly advantageous for highly redundant backup data sets, but points out that using real-time data compression on the front end (primary storage devices) can significantly reduce de-duplication processing time and enhance throughput, in addition to reducing overall capacity requirements.
To assess the validity of the test results, check them out here
And if you’re among the early adopters of data compression on primary storage, respond below or email me at daves@pennwell.com and let me know what types of real-life data compression ratios you’re getting.
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