EMC Plays Hardball, but Why?

By Chris Preimesberger  |  Posted 2009-06-01 Print this article Print

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.

Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on Salesforce.com and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and DevX.com and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz

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