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?
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.
NetApp’s initial bid for Data Domain came as a surprise to many. EMC’s counter was even more of a shock. These discussions have very important implications for data protection and deduplication. Two thoughts immediately come to mind:
It’s hard to do deduplication well.
EMC and NetApp say that they have robust deduplication solutions in their DL3D (Quantum technology) and NearStore VTL series products. Before these negotiations, you might have believed them. Now, they are both bidding aggressively on Data Domain. What does that say about their confidence in their own solutions? Remember, these are large companies with hundreds (thousands?) of engineers with storage experience. Why wouldn’t they just build their own deduplication technology? The simple answer is that developing really good, enterprise-class deduplication technology is difficult.
One of the questions I often get asked is “how do your products compare to Data Domain’s?” In my opinion, we really don’t compare because we play in different market segments. Data Domain’s strength is in the low-end of the market, think SMB/SME while SEPATON plays in the enterprise segment. These two segments have very different needs, which are reflected in the fundamentally different architectures of the SEPATON and Data Domain products. Here are some of the key differences to consider.
Data Domain recently announced that their new OS release dramatically improved appliance performance. On the surface, the announcement seems compelling, but upon further review, it creates a number of questions.
Performance Improvement
Deduplication software such as Data Domain’s is complex and can contain hundreds of thousands of interrelated lines of code. As products mature, companies will fine tune and improve their code for greater efficiency and performance. You would expect to see performance improvements from these changes of about 20-30%. Clearly, if an application is highly inefficiently coded, you will see greater performance gains. However, larger improvements like those quoted in the release are usually only achieved with major product architecture updates and coincide with a major new software release.
In this case, I am not suggesting that Data Domain’s software is bad, but rather that the stated performance improvement is suspect. They positioned this as a dot code release and so it is not a major product re-architecture. Additionally, if it was a major architecture update, they would have highlighted it in the release.
To summarize, the stated performance gains in the release are too large to attribute to a simple code tweak and I believe that the gains are only attainable in very specific circumstances. Data Domain appears to have optimized their appliances for Symantec’s OST and is trumpeting their performance gains. However, OST represents only a small fraction of Data Domain’s customer base and it seems that customers using non-Symantec backup apps will see uncertain performance improvements. Read on to learn more.
SEPATON issued a press release on Monday that is worth mentioning here on the blog. SearchStorage also published a related article here. The release highlights MultiCare a SEPATON customer that uses DeltaStor deduplication software in a two-node VTL.
In the release, the customer characterizes their testing of solutions from Diligent/IBM (now IBM TS7650G) and Data Domain. Specifically, they mention that the TS7650G was difficult to configure and get running and that the gateway head nature of the product also made it difficult for them to scale capacity. These difficulties illustrate the challenges of implementing the TS7650G’s head only design. With this solution, the burden of integrating and managing the deduplication software and disk subsystem falls on the end user. Contrast this with a SEPATON appliance that manages the entire device in a fully integrated, completely automated fashion.
They had a typical Data Domain experience. That is, their initial purchase looked simple and cost effective but rapidly become complex and costly. In this case, MultiCare hit the Data Domain scalability wall, requiring them to purchase multiple separate units. The result is that MultiCare had to perform two costly upgrades and had to rip and replace their Data Domain solutions with newer, faster units. Scalability is the challenge with Data Domain solutions and it is not uncommon for customers to purchase one unit to meet their initial needs and then be forced to add additional units or perform a forklift upgrade.
As MultiCare found, customers must thoroughly understand their requirements when considering deduplication solutions. They tested the head-only approach and found it to be too complex to operate and manage to meet their needs. They tried the small appliance approach and found that they outgrew their initial system and were forced to pursue costly upgrades. In the end, they recognized that the best solution for their environment was a highly scalable S2100-ES2 solution which provided the performance and scalability that could not be achieved with either the TS7650G or Data Domain.
The Thanksgiving holiday is a time to reflect on things that you are thankful for and so I figured that this would be a great topic for my one blog post this week.
1. That the Somali pirates have not hijacked SEPATON although Bloomberg suggests in a humorous press release that Citibank may be in their sights.
2. That the backup guy is no longer treated like an ugly step child and locked in the tape silo when naughty.
3. That data retention requirements are likely to get even stricter thanks to our friends on Wall Street.
4. I have a job.
5. My job is not selling Rube Goldberg contraptions.
6. Data Domain has spent millions educating the market on why dedupe matters but only offers solutions for SMBs.
7. That all those cubicle gophers are still jacking up their company’s capacity requirements by downloading, sharing and storing all of their personal MP3s, videos and photos.
8. That gas prices have declined so I no longer have to skateboard to work.
9. Our VTL is so easy to install and operate that a consultant with no SEPATON experience set it up and got it running in 15 minutes.
10. That the loud CS guy who sat across from me was relocated to the broom closet. 🙂
Feel free to post what you are thankful for in the comments. Have a great Thanksgiving.
I periodically peruse the blogosphere looking for interesting articles on storage, data protection and deduplication. As you can imagine, blog content varies from highly product centric (usually from vendors) to product agnostic (usually from analysts). I recently ran across a post over at the Data Domain blog, Dedupe Matters. This is a corporate blog where it appears that the content is carefully crafted by the PR team and is updated infrequently. Personally, I find canned blogs like this boring. That said, I wanted to respond to a post entitled “Keeping it Real” by Brian Biles, VP of Product Management. As usual, I will be quoting the original article.
A year or more later, Data Domain is scaling as promised, but the bolt-ons are struggling to meet expectations in robustness and economic impact.