Comments on: NetApp and Quantum: Why an acquisition would be difficult http://www.aboutrestore.com/2009/07/21/netapp-and-quantum-why-an-acquisition-would-be-difficult/ Blogging about backup, recovery and marketing in the storage industry. Wed, 04 Jan 2012 14:42:58 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Jay Livens http://www.aboutrestore.com/2009/07/21/netapp-and-quantum-why-an-acquisition-would-be-difficult/comment-page-1/#comment-4720 Jay Livens Fri, 14 Aug 2009 16:38:17 +0000 http://www.aboutrestore.com/?p=691#comment-4720 Bert, Thank you for your comment. You and I disagree on this point, and I appreciate your perspective. Bert,

Thank you for your comment. You and I disagree on this point, and I appreciate your perspective.

]]> By: Bert http://www.aboutrestore.com/2009/07/21/netapp-and-quantum-why-an-acquisition-would-be-difficult/comment-page-1/#comment-4719 Bert Fri, 14 Aug 2009 05:01:09 +0000 http://www.aboutrestore.com/?p=691#comment-4719 IMHO Quantum is a great target for Netapp, but I doubt they will bite as Quantum is packing debt and the EMC cash injection they got likely had all kinds of hideous terms for Quantum to navigate before entering a deal even if suggested. The performance and value of the VTL devices is not the issue at hand and the price EMC paid shows that. EMC did this to keep Netapp from getting good brand with lots of buzz. I would guess the last thing EMC wanted was Netapp getting face time with DD's installed base and selling more primary storage FAS units. Quantum also has a great customer list plugged full of tape maintenance contracts, and lowering your backup requirements via FAS is great talking point to lead with. My guess is this is about protecting home turf and not making megabucks on Dedupe. If the average sale was 600K (and it's not) they still need to do it over 4000 times (and they won't). They will keep selling avamar, and Networker, and Quantum/Adic tape, and Falcon Store, and Quantum DXi, now datadomain..... because they have too. IMHO Quantum is a great target for Netapp, but I doubt they will bite as Quantum is packing debt and the EMC cash injection they got likely had all kinds of hideous terms for Quantum to navigate before entering a deal even if suggested. The performance and value of the VTL devices is not the issue at hand and the price EMC paid shows that. EMC did this to keep Netapp from getting good brand with lots of buzz. I would guess the last thing EMC wanted was Netapp getting face time with DD’s installed base and selling more primary storage FAS units. Quantum also has a great customer list plugged full of tape maintenance contracts, and lowering your backup requirements via FAS is great talking point to lead with. My guess is this is about protecting home turf and not making megabucks on Dedupe. If the average sale was 600K (and it’s not) they still need to do it over 4000 times (and they won’t). They will keep selling avamar, and Networker, and Quantum/Adic tape, and Falcon Store, and Quantum DXi, now datadomain….. because they have too.

]]> By: Jay Livens http://www.aboutrestore.com/2009/07/21/netapp-and-quantum-why-an-acquisition-would-be-difficult/comment-page-1/#comment-4283 Jay Livens Wed, 22 Jul 2009 15:56:23 +0000 http://www.aboutrestore.com/?p=691#comment-4283 Hi and thank you both for your comments. Robin: I respectfully disagree. I think that EMC was having major issues with QTM technology and a key driver of the acquisition was technology. I believe that the EMC/QTM relationship is essentially over. I understand that they will have to support existing systems through end-of-life, but they are effectively done selling new QTM systems. If you are an EMC sales rep and you know that DDUP was just acquired and you have to choose between selling a QTM or DDUP system which do you sell? It is a no-brainer, DDUP is the only choice. Heck, I have even heard of current deals that have been delayed and/or canceled because customers do not want to invest in the now obsoleted QTM-based solutions. The statement that "Nobody knows. Or cares" about what Quantum does is true for an end user. However, I believe that it is completely relevant for any acquirer. If I am considering purchasing QTM, I care very much about the fine details of their business. I will value the company based off of its pieces, and need to understand how each segment is performing and the future prospects. I believe that the tape portion of the business will have a negative impact on the valuation since most disk companies will not want to run a physical tape business. In summary, I agree that the QTM's brand is weaker than DDUP; however, I believe that there are technology issues as well. In my opinion, simply acquiring QTM for $500 million and throwing the NetApp brand on it will not solve the problem. Curtis: Your point is a good one. NetApp could clearly improve their VTL if they invested more money. However, I question their commitment given their history of limited investment. The DDUP offer seemed like a further acknowledgement that they are looking elsewhere for VTL/Dedupe. Hi and thank you both for your comments.

Robin:
I respectfully disagree. I think that EMC was having major issues with QTM technology and a key driver of the acquisition was technology. I believe that the EMC/QTM relationship is essentially over. I understand that they will have to support existing systems through end-of-life, but they are effectively done selling new QTM systems. If you are an EMC sales rep and you know that DDUP was just acquired and you have to choose between selling a QTM or DDUP system which do you sell? It is a no-brainer, DDUP is the only choice. Heck, I have even heard of current deals that have been delayed and/or canceled because customers do not want to invest in the now obsoleted QTM-based solutions.

The statement that “Nobody knows. Or cares” about what Quantum does is true for an end user. However, I believe that it is completely relevant for any acquirer. If I am considering purchasing QTM, I care very much about the fine details of their business. I will value the company based off of its pieces, and need to understand how each segment is performing and the future prospects. I believe that the tape portion of the business will have a negative impact on the valuation since most disk companies will not want to run a physical tape business.

In summary, I agree that the QTM’s brand is weaker than DDUP; however, I believe that there are technology issues as well. In my opinion, simply acquiring QTM for $500 million and throwing the NetApp brand on it will not solve the problem.

Curtis:
Your point is a good one. NetApp could clearly improve their VTL if they invested more money. However, I question their commitment given their history of limited investment. The DDUP offer seemed like a further acknowledgement that they are looking elsewhere for VTL/Dedupe.

]]> By: W. Curtis Preston http://www.aboutrestore.com/2009/07/21/netapp-and-quantum-why-an-acquisition-would-be-difficult/comment-page-1/#comment-4281 W. Curtis Preston Wed, 22 Jul 2009 15:05:22 +0000 http://www.aboutrestore.com/?p=691#comment-4281 Here's a thought. NetApp has a dedupe VTL. Yes it's missing features. No, it's not selling a lot (in comparison to DDUP). BUT... How good could it be if they took a fraction of the $1.5B they were going to spend on DDUP and give it to the development team? Take another fraction and hire a bunch of exiting Data Domain reps. (The day the first EMC/DDUP announcement hit, a bunch of resumes hit the streets.) Just a thought. Here’s a thought. NetApp has a dedupe VTL. Yes it’s missing features. No, it’s not selling a lot (in comparison to DDUP).

BUT…

How good could it be if they took a fraction of the $1.5B they were going to spend on DDUP and give it to the development team? Take another fraction and hire a bunch of exiting Data Domain reps. (The day the first EMC/DDUP announcement hit, a bunch of resumes hit the streets.)

Just a thought.

]]> By: Robin Harris http://www.aboutrestore.com/2009/07/21/netapp-and-quantum-why-an-acquisition-would-be-difficult/comment-page-1/#comment-4252 Robin Harris Tue, 21 Jul 2009 19:26:14 +0000 http://www.aboutrestore.com/?p=691#comment-4252 My name is Robin Harris. And I disagree with the analysis here. EMC bought a successful brand. The tech is less than half the value of DD. And they aren't dropping QTM anytime soon. They can't - they sold too many. QTM doesn't have the product range DD does today, but they are working on it. What they don't have is the DD brand. Quick, what does Quantum do? Uh, disks, no tapes, no tape libraries oh yes de-dupe. Nobody knows. Or cares. But for $500 million they could change that - for a lot less than EMC spent on DD. Robin My name is Robin Harris.

And I disagree with the analysis here. EMC bought a successful brand. The tech is less than half the value of DD. And they aren’t dropping QTM anytime soon. They can’t – they sold too many.

QTM doesn’t have the product range DD does today, but they are working on it. What they don’t have is the DD brand. Quick, what does Quantum do? Uh, disks, no tapes, no tape libraries oh yes de-dupe. Nobody knows. Or cares.

But for $500 million they could change that – for a lot less than EMC spent on DD.

Robin

]]>