Categories
General

NetApp and Engenio – Part 2 – A Hypothesis

In my previous post, I discussed why I thought that NetApp’s acquisition of Engenio was a difficult one and why I question the value of the combined entity.  Simply put, there seems to be redundancy in the product line and it makes you wonder how a merged company creates substantial new value.  However, there is another angle that could help explain the move and can be simply explained in three letters – IBM.

NetApp has an existing relationship with IBM where IBM OEMs NetApp filers for their “N-Series” product line.  These products are virtually the same as what you can buy from NetApp directly.  However, the big difference is that they can be sold, quoted and supported by IBM.  IBM does have their own higher end NAS products called SONAS, but the N-series is still an important part of the IBM portfolio.  Clearly this relationship is an important one for both companies.

Categories
General

NetApp and Engenio – A curious acquisition

It was with some surprise that I saw the announcement that NetApp was acquiring Engenio this afternoon.  There was a long ensuing discussion on Twitter on this topic and I have serious doubts about the added value of the combined entity.  Here is why.

LSI’s primary go-to-market model has always been through OEMs and so they needed to have solutions that were feature rich enough to create a compelling value.  Obviously, their disk arrays have the basic table stakes such as replication and snapshots, but Engenio was trying to do more.  They wanted to create a modular array that could be extended with advanced software functionality to provide a unified storage platform.  They acquired StoreAge with a goal of bringing storage virtualization into their controller and later OnStor to embed NAS functionality.  Thus the end goal was clear – create an advanced RAID controller that could compete with the industry leaders and leverage their OEMs to go to market.  Interestingly, this model is more similar to NetApp’s strategy then you might think.

Categories
Deduplication Virtual Tape

The Demise of the NearStore VTL: A historical perspective

Rumors have been circulating for months about the demise of NetApp’s VTL offering. Today, Beth Pariseau from SearchDataBackup published the first public confirmation that development on the product has ceased. It is not a surprise, but makes for an interesting case study.

NetApp acquired VTL technology with their purchase of Alacritus for $11 million back in 2005. Alacritus provided a software only VTL solution that ran on a Linux platform. Their product specifications appeared impressive, but they had limited success in the US. Our partners in Asia saw them more frequently. For NetApp, the acquisition made sense because it represented a relatively cost-effective entry into the rapidly growing VTL market. However, as in most things, the difficulties were in the details.

NetApp’s core intellectual property is their ONTAP operating system and associated WAFL filesystem. These components provide the intelligence and value-added features of their arrays. The challenge for NetApp after acquiring Alacritus was the integration of the two technologies.

Categories
Deduplication

NetApp and Quantum: Why an acquisition would be difficult

A couple of weeks ago, Robin Harris at Storagemojo blogged that he thought it would be a smart move for NetApp to acquire Quantum. I do not agree and think that a Quantum (QTM) and NetApp combination would create major competitive and business challenges and would not be successful in the long-term.

Categories
Deduplication

It’s final – EMC acquires Data Domain

Just a quick post to highlight Data Domain’s announcement that they have agreed to be acquired by EMC.  As mentioned in previous posts (see related posts below), NetApp did not have the financial strength to compete with EMC.

The companies that have lost the most in this deal are Quantum and NetApp, and it will be curious to see how NetApp responds.  I discussed NetApp’s situation briefly in Tuesday’s post.

Categories
Deduplication

EMC one-ups NetApp

As expected, EMC has increased their bid for Data Domain and is now offering $33.50 per share in cash. Data Domain has been ignoring EMC in favor of their preferred suitor, NetApp; however, with the recent increase, Data Domain has no choice but to consider the EMC offer.

This situation leaves NetApp in a tough spot. James Bond describes the situation perfectly in the movie, For Your Eyes Only,

“I’m afraid we’re being out-horse-powered!”

NetApp wants to acquire Data Domain (and the feeling is mutual), but they are being out-horse-powered by EMC. NetApp does not have the financial strength to go head-to-head with EMC’s increasingly aggressive all-cash offers. NetApp must be evaluating how badly they want Data Domain and at what cost.

Categories
Deduplication

Poll: Who will acquire Data Domain?

Things have been quiet on the EMC/NetAppData Domain for the last couple of weeks.  DDUP’s stock price remains above NetApp’s current purchase offer ($30) which suggests that people think the bids will increase.  I also found some seemingly contradictory articles.  The Motley Fool suggests that EMC should back out of bidding for Data Domain because they cannot win.  Storage Biz-News.com indicates that EMC has upped their offer to match NetApp which suggests the EMC thinks they can win.  At the very least, we know that EMC has extended their current offer.

As previously posted, I believe EMC will acquire Data Domain. Who do you think will be the acquirer?

  • EMC: They are committed and will win at any cost. (65%, 17 Votes)
  • NetApp: DDUP's board favors NetApp. (27%, 7 Votes)
  • A mysterious company C. (8%, 2 Votes)
  • Nobody, DDUP will remain independent. (0%, 0 Votes)

Total Voters: 26

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Categories
Deduplication

NetApp and Data Domain: ‘Til death or a better offer from EMC do we part

I recently blogged with my thoughts about EMC acquiring Data Domain, and wanted follow-up with a post discussing some key points about a NetApp/Data Domain merger. Since that last post there have been numerous changes including EMC suggesting that they might up their offer; the inevitable threat of a class action lawsuit, Data Domain endorsing the second NetApp offer and the government initiating an antitrust review. In this context I want to dissect some key points to consider regarding this acquisition.

Categories
Deduplication

NetApp is backed into a corner

Reuters indicates that EMC will up its bid for Data Domain to as much as $35 per share. As previously posted, Data Domain’s products will fit easily into EMC’s product line replacing EMC’s current Quantum-based appliances. With this increased offer, EMC is increasing the pressure on NetApp and reaffirming their commitment to acquire Data Domain.

What does this mean?

Categories
Deduplication

EMC and Data Domain: It was the best of times, it was the worst of times

I was surprised when NetApp offered $1.5B for Data Domain and was even more surprised when EMC countered with an all cash offer of $1.8B. NetApp has since upped their offer to $1.9B of cash and stock. It is in the context of this uncertainty that I wanted to comment on a possible EMC/Data Domain acquisition.

What about EMC’s DL3D product line?
EMC sells target deduplication solutions (DL3D product line) through a partnership with Quantum. These products compete directly with those from Data Domain and rely on similar technology. (Data Domain disclosed that it had licensed Quantum’s deduplication patents in their own IPO documents.) Even though EMC strengthened their commitment to Quantum by providing a $100 million loan back in March, the Data Domain announcement raises serious questions about EMC’s commitment to Quantum. If Quantum’s technology was really good, then why bid almost $2B for a competing technology especially since they could buy Quantum for less than half of this amount.

Some have suggested that EMC is bidding on Data Domain because they want to hurt NetApp. This is certainly a possibility. However, EMC provided a very strong counter-offer and has to recognize that they may own Data Domain in the end.