The picture for EMC appears clearly defined. But what happens now with NetApp?
There are other companies out there, such as ExaGrid, Quantum, Xiotech, 3PAR, Copan Systems, Compellent, CommVault, and Sepaton, which would also make good midmarket acquisitions for a company like NetApp or a major data systems maker. Most analysts contacted by eWEEK said they believe this market consolidation isn't over, not by a long shot.
Robin Harris, principal analyst at StorageMojo, wrote in his blog that NetApp should now turn its attention to acquiring Quantum, which ironically is closely aligned with EMC and Data Domain through deduplication-licensing deals.
"Should NetApp buy Quantum? With EMC officially overpaying for DD [$2.1 billion in cash, triple the value of the company four months ago], this could be very smart for NetApp," Harris wrote July 6. "With a current market cap of [about] $200 million-and a 52-week high market cap of [about] $400 million, they would be an excellent consolation prize should EMC win Data Domain."
Harris listed the advantages to NetApp of acquiring Quantum:
"-Dedup appliance product line-ripe for the cost improvement that NetApp's buying power would give them.-Dedup patent portfolio-to help keep EMC honest.-Good market positioning: "Buy the technology that EMC has licensed from us!"-Way lower cost. Anti-trust concerns would keep EMC from bidding on Quantum, so unless another spoiler comes along-IBM, HP [Hewlett-Packard], Dell, HDS [Hitachi Data Systems]-a deal could be much closer to QTM's 52 week high.-A happy Silicon Valley home for ex-Data Domain staffers. No non-competes in California and most of the technology is already cross-licensed, which is about as clean as these things get."
Quantum also has good arrays designed for high-end, high-capacity storage requirements, the kind that most of the Fortune 100 companies use every day. With all that Quantum firepower in its arsenal, NetApp would be much better fortified to approach larger-enterprise IT managers and CTOs-the exact market direction Chairman and CEO Dan Warmenhoven and NetApp need to go.
Could NetApp itself become a takeover target? It's possible, but not likely any time soon, analysts said. The consensus seemed to be that NetApp would be expensive and can probably only be acquired by a major systems maker. It might fit in well with Cisco Systems or HP-two companies that want to "own" the data center someday and that might be looking to fill out their storage product lines.
"It would have to be a major strategic move for somebody, and the product line would have to fit very tightly with a company's existing catalog," one analyst said.
Unni Narayanan, CEO of Primary Global Research, told eWEEK he believes NetApp needs to upgrade its product line in a few areas if it wants to better penetrate the Fortune 100 market.