Data Dedupe Heats Up with Acquisitions Such as Data Domain and Kadena

By Steve Wexler  |  Print this article Print


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EMC is trumpeting five years of 35,000 percent growth for its data dedupe acquisition, Data Domain, but there's still room for smaller companies like CommVault and Arkeia, which just acquired Kadena Systems.

Data dedupe and backup-and-restore software were put under the spotlight recently when EMC outdueled NetApp to buy Data Domain, shelling out $2.1 billion for a company that was generating less than $300 million in annual sales. The good news for EMC is that Deloitte LLP ranked Data Domain as the seventh fastest growing technology company during 2004-08, with revenue growing more than 35,000 percent.

The bad news, says analyst David Hill, principal at Mesabi Group, is that there are a lot of companies out there with data dedupe and backup-and-restore capabilities. He sees these features as a must-have, not necessarily a differentiator.

He says CA, EMC, Hewlett-Packard, IBM and Symantec all have well-recognized, well-respected and well-accepted products in the backup/recovery software space, and there are a host of smaller vendors like Acronis, Atempo, BakBone and Zmanda. Two companies that stand out to him are CommVault and Arkeia Software, he said.

CommVault has made itself into a Tier 1 vendor, with $66.7 million in revenues for its latest quarter, said Hill. This is not just a game for the big vendors, and Hill points to Arkeia as another company with significant potential.

On Tuesday it acquired Kadena Systems, the developer of a "block-grain, content-aware, sliding-window data deduplication technology." Arkeia plans to integrate Kadena's deduplication technology to deliver source-side data deduplication in Arkeia Network Backup, which will accelerate backups and reduce network congestion and is suited for virtualized environments that have heavily duplicated data.

Business continuity is the main driver behind this market, says Hill. If there is ever a problem, you have to be able to restore the data, he says. Ever since Sarbanes-Oxley and the threat of legal repercussions, risk avoidance has been critical, and it's not just for big companies, he says.

"Going to jail may be a concern for large organizations, but for smaller businesses, if you lose your data, you're out of business."

Virtualization is another driver, and one that favors Arkeia, he says. Bandwidth restrictions and backup times are critical.

He says in a network backup scenario where data is backed up over a LAN or WAN, reducing the time required for backup can be considerably improved with data deduplication, especially if it occurs at the source, where the data to be backed up resides, rather than at the target, where the backup copies are destined. Focusing on the source, like Arkeia, means only unique data segments get sent to the target, reducing the overall volume of data transmitted and thus speeding the backup process.

"Companies like Arkeia should get a pat on the back for what they're doing, but that doesn't put them in the big leagues," says Hill. However, while the large companies like EMC have size and scope, smaller companies like CommVault and Arkeia can have greater speed and agility.

Most of these companies don't grow up to be big, but there are exceptions, he said. "If they have correctly identified a market trend that others haven't been able to address and they are well-positioned and think clearly, they can be very successful."


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