EMC Dances With Dantz

EMC Corp. (NYSE: EMC) added another software company to its roster today when it closed the acquisition of Dantz Development Corp., which sells backup and recovery software for SMBs.

EMC paid less than $50 million for the 20-year-old private company in a cash transaction. Byte and Switch reported last Thursday that EMC was negotiating to acquire Dantz.

Dantz is EMC's 15th software acquisition since 2000, but a relatively small one compared to the purchases of Legato, Documentum, and VMware last year (see EMC Swings Into Software Big Leagues and EMC Gobbles VMware). Those three cost EMC more than $3 billion and helped establish it as more than just a hardware company.

Dantz's 80 employees will join the EMC Software Group while continuing to work out of Walnut Creek, Calif. Dantz CEO Larry Zulch will report to Dave DeWalt and Mark Lewis, EVPs of the EMC Software Group.

Dantz's backup software fills a role for EMC as it tries to move into the SMB space, considered fertile ground for networked storage. Last May, EMC jumped into the SMB storage market with the $6,000 AX100 system and a Windows-based NAS offering (see EMC, Dell Get Small With SATA and EMC Joins Rush to Windows NAS).DeWalt called Dantz "a strategic acquisition" to help EMC target the SMB market. "Dantz helps EMC methodically enter the SMB software market," he said.

EMC acquired backup software when it bought Legato, but Legato's products are aimed at the enterprise.

"I can see why they would acquire this company, because Legato doesn't go down this low," says Punk Ziegel & Co. financial analyst Steve Berg. "I can't say it's a case of EMC looking for additional software revenue. They're pushing downmarket."

EMC will offer Dantz Retrospect and Legato NetWorker backup software as separate standalone products, but the company plans to provide a common management console for customers running both. Retrospect provides backup and restore for file servers, desktops, and notebooks, and works with Windows and Macintosh operating systems (see Dantz Announces Retrospect Backup).

The acquisition gives EMC another weapon to use against Veritas Software Corp. (Nasdaq: VRTS) (see New EMC Group Jabs Veritas). Veritas is the market leader in SMB backup, but Dantz is probably less of a threat to Veritas than Legato is in the enterprise."EMC may very well bundle the Dantz backup product with the low-end AX100 storage array, but Dantz remains a question mark, and we would take a wait-and-see approach," says financial analyst Kaushik Roy of Susquehanna Financial Group. "EMC bought the low-end SRM company Astrum Software, but we don't see much traction in that product line for EMC." (See EMC Sucks Up Astrum.)

Dave Raffo, Senior Editor, Byte and Switch