NetApp-Data Domain: A Sign of the Times

Today’s revelation that NetApp will acquire Data Domain for $1.5 billion in cash and stock has many in the industry reeling in shock. It’s a huge acquisition, and it shows how important dedupe is to the storage industry. It also leaves one wondering now how HP, Dell, EMC and others are going to compete on storage efficiency, data reduction, and dedupe over the next years.

Of course, at Ocarina we think this is great – the market is going to need leading-edge data reduction products and technologies, and now one vendor, NetApp, has the market leadership position in both dedupe for online with NetApp Dedupe and dedupe for backup with Data Domain.

This clearly creates a situation where the rest of the storage industry is going to have to respond to stay competitive, and we think we have the best products, technology, and IP to enable the industry to compete with what is now the NetApp juggernaut.

The Data Domain technology gives NetApp an immediate leadership position in Dedupe for Backup, but the DDUP technology will not translate easily in to dedupe for primary, where NetApp Dedupe already exists in the filer. It will be interesting to see over time whether NetApp keeps Data Domain focused strictly on backup and archive markets, or tries to incorporate some of their IP in to dedupe for online over time.

At $25 a share, NetApp paid a 40% premium on yesterday’s closing DDUP price of about $18/share. This is a great comparable for not only the excitement around data reduction, but also the difficulty of doing it right. In short, if it was easy to copy, then NetApp would not have paid the premium. It’s a win for the Data Domain team, which is a top notch group of people who have built a great product and executed extremely well in all aspects of their business.

We’ll be very interested to see what happens in the coming weeks and months following the acquisition.