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NetApp Counters for Data Domain;
Offers $1.9 Billion to Block EMC

EMC has made a surprise all-cash bid for data deduplication vendor Data Domain, setting up a potential bidding war with its storage rival Network Appliance.

EMC could short-circuit NetApp’s plans to acquire Data Domain for $1.5 billion in cash and stocks with its offer of $1.8 billion in cash to buy the deduplication specialist. EMC’s Chairman, President and CEO Joe Tucci said in a conference call to discuss the bid that EMC wants to combine Data Domain’s deduplication technology with its own, but will run the company as a division of EMC and further invest in research and development. Tucci added that EMC would use its extensive sales and marketing infrastructure to sell Data Domain products to a much larger potential customer base.

Cisco CEO John Chambers, in an interview with Channel Insider at the networking company’s partner summit in Boston this week, remarked on the dual bids, citing the heightened interest in deduplication technology. "There’s a tremendous amount of growth in this area, so it’s no surprise that NetApp and EMC are interested in this area," Chambers said.

The deduplication market is hot, says Fadi Albatal, director of marketing at storage management and dedupe software provider FalconStor, which competes directly with Data Domain. Albatal says the advent of virtualization, among other factors, has increased the amount of data organizations must back up, secure and store. Deduplication plays a major role in utilizing storage capacity more efficiently, as the technology eliminates redundant files and information that can hog valuable storage space, he says.

The technology is especially attractive to large enterprises with massive data stores as well as federal government agencies, the education market and health care, Albatal says, where incredible amounts of data must be stored securely using limited IT and storage budgets.

While Tucci said that EMC has its own deduplication technology, an acquisition would more quickly boost EMC’s presence in the dedupe marketplace and allow the company to stake a claim in the lucrative space.

Albatal says he’s pleased to hear of the proposed acquisition, since further consolidation in the market means there are fewer competitors to worry about, and expects that the news will provide a real growth opportunity for FalconStor and its channel partners.

“NetApp and EMC obviously see a growth opportunity in the market, so this validates our presence,” he says. “Consolidation in the market means not only fewer competitors to worry about, but we also hear from our channel partners that they want to distinguish themselves with a different solution like ours,” Albatal says.