EMC's Next Move

Someone is going to lose when Data Domain is acquired by EMC, NetApp or someone else, and that company is going to go out and look for someone else to acquire. They have to -- they just admitted to the tune of billions of dollars that their current strategy isn't going to cut it. If the current NetApp offer stands, what is EMC's next move?

EMC just submitted a major and very public no confidence vote in their current partnerships and products. If they lose this bidding war, I think it is hard for them to go back to that relationship and say everything is great. They could say they were just trying to drive the price up and make NetApp pay an extra $4 million or so (they wouldn't do that would they?), but I think that EMC really wants or wanted Data Domain and still does -- but if they lose what do they do?

The exception with EMC is Avamar -- they can clearly keep that technology intact and continue to advance it. It continues to solve a different problem and is for a customer that is ready to replace their current backup process -- not just extend it. Data Domain would and may still have given them the ability to also extend a customer's current backup infrastructure, by adding deduplication and replication, without replacing it. Yes, they can still do that today with their current Quantum relationship, but obviously EMC thought something was lacking there.

If EMC can't figure out a way to position not getting Data Domain, they are forced to do something else. CommVault is being talked about as the next acquisition target, and if you look at their stock it is suddenly trading up a bit. This combo makes the least sense for EMC -- they already have Legato, EmailXtender, DiskXtender and the aforementioned Avamar. I just can't see them going after another backup software solution, but EMC is always full of surprises. CommVault becomes more interesting if NetApp loses this bidding war, then I think a CommVault/NetApp deal becomes very probable.

There are other candidates that have deduplication engines. Permabit, for example, is in the archive market and has block level deduplication capabilities in their system. I don't think it would take much work to tune it toward backup as opposed to archive. It does inline deduplication and it is grid based, so it scales and the technology has been well vetted over the years. A Permabit deal would provide benefits to EMC's archive and cloud portfolios. Plus, they are right there in the Boston area so it would be a short drive. They could also look at ExaGrid, which has similar capabilities but may not scale quite as large as EMC is looking for.