InfoStor : De-dupe market primed for takeoff, August 2007 Page 1

Industry analysts and storage vendors have been heralding data de-duplication as one of the hottest technologies to hit the storage industry for more than a year. And-if recent market activity, projected growth, and end-user interest are any indication-they may be right on the money.

According to a recent report from The 451 Group research firm, the data de-duplication market went from non-existent three years ago to approximately $100 million in 2006. The 451 Group predicts that number will rise to $260 million this year and, at the current rate of growth, the de-dupe market should hit the $1 billion mark by 2009.

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The report, “Data De-duplication: Changing the nature of data protection,” is based on a survey of 115 IT decision-makers ranging from backup administrators to CEOs. According to the survey results, nearly 85% of the respondents were familiar with or aware of de-duplication products and, surprisingly, 23% of the respondents have already installed a de-duplication product.

The research also shows that, among non-users of data de-duplication, 53% were “very interested” in buying or assessing de-duplication products, and 28% plan to do so within the next six months (see figure, p. 1).

As one of the first companies to recognize that data de-duplication technology would play a key role in the world of disk-based backup, Data Domain got out ahead of the pack with its product line and is now reaping the benefits. The company’s IPO last month was seen by many as a barometer for the de-dupe market.

Data Domain priced more than 7 million shares of common stock at $15 per share in the hopes of raising $94.2 million. At press time the stock had climbed to $27.55, solidly exceeding expectations.

Simon Robinson, research director for storage at The 451 Group and author of the report, says Data Domain’s success-at least initially-is significant in several ways.

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First, disk-based data protection utilizing de-duplication is increasingly becoming a “must-have” feature for small and medium-sized businesses (SMBs). Second, the IPO establishes Data Domain as the early front-runner in the market, which, according to Robinson, should “provide a wake-up call to other data-protection vendors that de-duplication is a real technology that users are keen to implement right now.”

Robinson notes that Data Domain has more than 700 customers and over $100 million in annual revenues from a standing start just a few years ago. Robinson predicts Data Domain will close out 2007 with revenues of at least $120 million-two-and-a-half times the revenue it generated in 2006.

Given the end-user interest and the success of start-ups such as Avamar (which was acquired by EMC) and Data Domain, the next logical step in the evolution of the de-duplication market is the entry of the tier-one storage vendors. Network Appliance has already begun offering de-duplication as part of its Data OnTap operating system, as is Hitachi Data Systems in its recently released Hitachi Content Archive Platform (HCAP). EMC has announced plans to offer de-duplication across its entire line of disk libraries in early 2008.

“As major vendors such as EMC, Network Appliance, Symantec, and Quantum come to market, the race is on,” says Robinson.

Other players in the data de-duplication market include vendors such as Asigra, Diligent Technologies, ExaGrid, FalconStor, NEC, and Sepaton.

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