Is Data Domain a good fit for EMC?

July 10, 2009 -- The experts are weighing in on EMC's pending acquisition of Data Domain and questions abound. Did EMC pay too much? How will it juggle its many data deduplication offerings? Did NetApp make the right move?

The price tag was just too high. EMC forced NetApp to bow out of its acquisition agreement with Data Domain earlier this week after upping the ante to $2.1 billion.

According to some analysts, this may have been a blessing in disguise for NetApp.

"NetApp just forced EMC to spend [more than $2 billion] for an asset that really doesn't fit and that EMC didn't want until it thought NetApp would get Data Domain," says David Vellante, co-founder and contributor to The Wikibon Project. "EMC-ers believe that dedupe is best done at the source. It's a culture clash of a serious nature."

Vellante believes NetApp's interest in acquiring Data Domain was based on the potential impact it could have on the bottom line.

"NetApp wanted Data Domain because it saw Data Domain as the path of least resistance to $5 billion in revenue. Personally, I think there are better ways to get there," he says.

Vellante's opinion echoes that of Enterprise Strategy Group (ESG) founder and senior analyst Steve Duplessie.

"I think the price was too high to begin with and nuts by the end," says Duplessie. "I think NetApp would have enjoyed a lot of synergies and opportunity with Data Domain, but at that price, there was simply no margin for error. I think it would have strapped them and put an unnecessary microscope on their every move that would deflect from the fact that they are a great company. I think they will be happy with their decision."

Now, he says, EMC will be under that microscope.

"EMC has more room to maneuver simply because of their size and assets, but that doesn't mean they won't be under the microscope. That's a mongo big price to pay for anyone to simply ignore it. They certainly have the muscle and brains to make it work, but it won't be easy," says Duplessie.

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posted by: Kevin Komiega

Kevin Komiega, Senior Editor
by Kevin Komiega
Senior Editor

Kevin Komiega has been the Senior Editor of InfoStor since 2005. He was previously a senior news writer with SearchStorage.com and held a position as a public relations account executive with Porter Novelli, Boston. Kevin also spent four years running tape backup operations at the University of Rhode Island's Academic Computer Center. He can be contacted at kkomiega@quinstreet.com.

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