Much has already been written about this imminent acquisition of Data Domain by either NetApp or EMC and, since opinions are like you-know-what, and I have one, here it isâ€¦ if I ramble, forgive me. I have too much to say and Iâ€™m trying to be PCâ€¦ I wrote and subsequently erased all kinds of stuff that could probably get me in trouble (the more you work with a company the more dirt you uncover, and I have several earth moversâ€™ worth).
I do think that both companies waited too long to try and acquire Data Domain â€“ frankly, itâ€™s staggering to me that other companies that make decent products like CommVault havenâ€™t been acquired yet (I mean, seriously, if EMC want to compete in the backup software space they should just drop Networker and buy CommVault). Consolidation is the trendâ€¦
Maybe both NetApp and EMC thought their in-house deduplication would work out for everything, maybe they thought Data Domain wouldnâ€™t become a contender. Maybe they thought it was just a phase. Either way, the backup market is still strong, most people donâ€™t want to move en masse to something like Avamar, not everyone needs VTL, and Data Domain does provide a very convenient way to keep using your existing backup product, make next to no changes, and get better efficiencies.
The simple truth is that EMC needed SOMETHING to combat Data Domain so they signed the agreement with Quantum and rushed the product to market. And then tried to strong-arm the resellers into forgetting about Data Domain and instead selling the new and amazing DL3D (that backfired BTW).
As far as EMC is concerned, the attempt to acquire Data Domain is a slap in the face for Quantum and all the customers that have been pitched/sold DL3D (the OEMâ€™ed Quantum DXi product). EMC has spent quite a bit of time belittling Data Domain and instead pushing a product that has seen very limited testing (I know, Iâ€™ve been burned personally by it several times). A good example: EMC recently released a patch to allow backups done with EMCâ€™s Networker to actually be deduplicated (talk about a reason to return a product if there ever was one â€“ like a car that canâ€™t go faster than 10 mph or that gets 2 mpg instead of 20 mpg). You see, there was an issue with the filter that figures out what backup app youâ€™re using, and Networker backups were getting only plain old compression, NO deduplication. This is no secret, if anyone bothers to read the release notes of the recent patches theyâ€™ll see this info. Maybe if youâ€™re a DL3D customer you should insist on reading the release notes if theyâ€™re not easily available? After all, you have a right to know whatâ€™s changing!
Think about this: EMCâ€™s own backup product was not tested with DL3D. Yet EMC happily sold DL3D to customers with Networker. To me, this is a sales-driven company, not a customer-driven company.
Not to mention other crippling bugs, slow startup times (especially in the case of unclean shutdowns) and the abysmal performance which simply stems from how the product is designed â€“ itâ€™s spindle-happy and needs about 2 trays of drives to work well. Oh, and donâ€™t EVER fill it beyond 80% capacity. Youâ€™re also not supposed to use it as a normal CIFS/NFS share for archiving anything like email or normal files (arguably a great place for dedup).
So, EMC knew about the DL3D issues (well, some of them, itâ€™s not their product after all, indeed I helped them identify some of the bugs) and played coy with customers. Then, they saw NetApp making a move for Data Domain and realized that by buying Data Domain EMC could accomplish several things:
- Minimize NetAppâ€™s cash reserves if NetApp does in the end succeed in acquiring Data Domain (but is that necessarily a bad thing for NetApp?)
- Remove the flailing DL3D and replace it with a product that actually works and is selling very well
- Get a bunch of solid deduplication and consistency checking algorithms
- Assimilate a competitor thatâ€™s been a huge thorn on EMCâ€™s side in that space
- Reduce the efficiency of NetApp as a competitor
But think from the customer standpoint for a minute (most of the analysts so far seem to miss the most important player here â€“ and thatâ€™s certainly not EMC, NetApp or Data Domain, but the customer). Youâ€™ve been pitched DL3D, and now you must forget about that and all the bad things you were told about Data Domain â€“ itâ€™s all good now that it belongs to EMC, youâ€™ll be taken care of. Or you can buy the DL3D if you still want it (and I donâ€™t see EMC derailing ANY existing DL3D campaign, no matter what).
I were a DL3D prospect/customer, Iâ€™d be worried no matter what.
Letâ€™s talk about the best place for Data Domain to end up. As far as investors go of course, if they want to make a quick buck and run, the EMC cash offer is tantalizing. But for Data Domain employees, EMC can be a black hole and the added complexity and bureaucracy anything but fun. EMC has become almost too diversified â€“ letâ€™s look at just some of EMCâ€™s storage solutions (I wonâ€™t mention the software since then itâ€™d be a REALLY long and weird post):
- Avamar (thatâ€™s both a software solution and an appliance)
Whatâ€™s interesting is that, by and large, the teams in charge of the above products donâ€™t talk much, if at all, with each other. Talk about islands! And, when it comes to sales, EMC has internally competing groups of people that sell the above products â€“ for instance, â€œNAS overlayâ€ guys only get paid on Celerra sales, and Iâ€™ve seen them screw up campaigns that were clearly a pure Clariion play just so they could somehow get some Celerra in so they get paid. The basic EMC sales guy you meet can sell them all and indeed doesnâ€™t care, but the people he relies on for support cannot sell them all and do care about what gets sold. Itâ€™s all very fragmented and, again, not a model that operates with the customerâ€™s best interests always in mind. It always baffled me why EMC would allow so much fluff in their sales organization.
So, if Data Domain got absorbed, theyâ€™d probably not be enjoying all the â€œmelting potâ€ advantages the EMC corporate bloggers seem so keen on advertising, and the â€œlarge startupâ€ feel (maybe itâ€™s like that in MA for a few chosen people â€“ in most other locations itâ€™s decidedly not like that). Theyâ€™d just be another acquired unit, internally competing with other units, dealing with large-company politics and other inefficiencies. The EMC stock wouldnâ€™t really become much higher than it is now, if at all. Itâ€™s been about the same for quite some time now.
Letâ€™s examine the scenario of NetApp buying Data Domain:
- NetApp is much more focused than EMC â€“ indeed they have literally less than a handful of major offerings that donâ€™t really compete with each other
- The NetApp sales force is unified and doesnâ€™t internally compete about what to sell
- NetApp culture is much closer to Data Domain culture
- Itâ€™s not good for innovation to have one company hoarding 3 dedup technologies, NetApp + Data Domain will actually push EMC more and be better for the customers
- Data Domain could make NetApp much stronger against EMC, in turn driving NetAppâ€™s stock price up significantly. Which, in turn, would give investors back much more than $2bn, thereby making this the better deal.
The only drawback I see (as do most writing about this) is NetAppâ€™s relatively poor history in managing the few acquisitions theyâ€™ve made. But I believe that as long as they leave Data Domain alone and slowly try to integrate the technology in the other products it will all work out.
Hopefully all this made some senseâ€¦