Data Domain IPO: Barometer for de-dupe?

By Kevin Komiega

—Data Domain was one of the first companies to recognize that data de-duplication technology would play a key role in the world of disk-based backup. And now that the company has gone public, some are using Data Domain's success to gauge customer and industry interest in de-duplication on the whole.

Yesterday, Data Domain priced more than 7 million shares of common stock at $15 per share in the hopes of raising $94.2 million. At last check the stock had climbed to $23.30, exceeding expectations by about 36%.

Simon Robinson, research director for storage at The 451 Group, says Data Domain's success—at least initially—is significant in several ways.

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 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 and his colleagues at The 451 Group project Data Domain will close out 2007 with revenue of at least $120 million—two-and-a-half times the revenue it generated in 2006.

Data Domain recently refreshed its flagship virtual tape library (VTL) lineup with a faster, more scalable de-duplication system: the DD580. The new system takes advantage of multi-core processors to make it possible for a single DD580 to deliver up to 800GB per hour of aggregate throughput.

The next 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, and EMC recently announced plans to offer de-dupe across its entire line of disk libraries in early 2008.

"EMC and NetApp seem to be the two big vendors that are really focused on embedding de-duplication technology across their platforms," says Robinson. "As major vendors such as EMC, Network Appliance, Symantec, and Quantum [see Quantum to offer de-dupe options] come to market, the race is on."

This article was originally published on June 28, 2007