NetDomain -- What If It Works?

There have been a lot of negative comments written about the NetApp acquisition of Data Domain, of course most of them written by their competition. As I have written here before, I am always skeptical of technology acquisitions. But lets for a moment examine the scenario of the deal actually being successful.

I think there are two scenarios. NetApp could leave Data Domain alone, ala EMC and VMware, and just let them continue to grow their core business. The are a few challenges with this model. First, its very hard to leave well enough alone; I am always amazed that EMC was able to keep its hands off of VMware as long as they did. Second, NetApp did pay $1.5 billion for Data Domain. If NetApp just lets Data Domain be Data Domain and, assuming that they maintain the same growth path, it going to be a long time before NetApp sees a return on that $1.5 billion investment.

I think this scenario is the most likely outcome of the deal and would certainly be acceptable.

The other scenario, one that is completely my conjecture and probably won't happen, would have greater risk but potentially greater rewards. First give the entire non-production storage product line to Data Domain. Not only from a field sales and engineering standpoint, but also from a development standpoint. That includes NetApp products like NearStor, Open Systems Snapvault, Snaplock, the Alacritus VTL, etc. The former Data Domain guys would be the team that builds the secondary storage product line, something NetApp has struggled with -- especially outside of NetApp accounts.

The former Data Domain could then pick and choose the technologies that make sense for them to integrate. Snapvault, for example, could give them some source-side data reduction that when combined with a back-end dedupe appliance could better address more of the backup bottleneck.

From there the combined companies could look into the feasibility over the next two years of integrating Data Domain's deduplication functionality into NetApp's OnTap operating systems. Imagine if they could do this with minimal or no performance impact. Compression and deduplication on primary storage with no performance impact would be an enormous competitive advantage.

For example, a customer looking for 80 TBs of primary storage from a competitor might only need 50 TBs or less from NetDomain. That would give them a clear advantage, especially if they could maintain the same deduplication from primary storage all the way through backup.

This would take a lot of work, and you have to look no further than the Spinnaker deal to realize that NetApp has struggled with other such integration efforts. But if, and yes that is a big if, they could pull it off, things could get very uncomfortable for the competition.

While I can't confirm nor deny the rumors that I have been asked to run the transition team, I do think its a little soon to pronounce this deal dead on arrival. Unlike many technology acquisitions, the company being bought was not at death's door and was in fact continuing to grow their business.