EMC Plays Hardball, but Why?
Reaction to the bidding war from the storage analyst community was swift.
"I see absolutely nothing logical in the move, and if I were NetApp, I would look at this as the world's best Mulligan," Steve Duplessie, founder and principal analyst at Enterprise Strategy Group, wrote in his blog. "EMC has 19 dedupe solutions already, owns Quantum, practically, and already sells more target-based backup systems than Data Domain. Why on Earth would they want to pay that much for another version of a feature that won't support the only place they should be trying to play: the high end?
"Had they announced that they bought Sepaton for $400 million or so, I would have said OK, good move. But this? This was nuts when NetApp was doing it at $1.5 billion. It seems super-nuts now."
Duplessie speculated that "maybe EMC is trying to get NetApp to spend even more than they wanted; their cash position is nowhere near EMC's, so maybe they are super-smart and trying to get NetApp to spend $2 billion-which will be a huge blow to their cash position."
Wikibon President and co-founder Dave Vellante, a longtime storage analyst and consultant, said he wondered how hard Data Domain "shopped the company" before settling on the NetApp bid.
"If I were a Data Domain shareholder, I wouldn't be pleased, given that EMC is willing to spend $300 million than NetApp offered," Vellante wrote in his blog. "I had always assumed EMC passed [on the deal] because it felt (as did I) that the NetApp bid was too high in these crazy economic times. But it's obvious Data Domain didn't really get what it could have from the NetApp bid.
"If NetApp counters and outbids EMC, EMC [exacts] some serious pain on NetApp. If EMC wins, it gets Data Domain; I could envision worse things than complete domination of the data reduction market. Bottom line: EMC doesn't mess around. They saw an opportunity to play hardball and they took it," Vellante wrote.