Why EMC’s Offer for DDUP Will Be Difficult for NetApp to Beat

Surprise! EMC now wants in on the Data Domain sweepstakes. The biggest gorilla with the most bananas in the storage cage comes to the table with an impressive cash offering: 300 million more bucks, or about 20 percent more, than NetApp’s already generous offer, for a total of $1.8 billion in cash.

That’s a lot of Franklins for DDUP (Data Domain’s stock acronym)—or for anybody, for that matter.

We’re always good for a bidding war; it makes for good copy. The question raised by some analysts, however, is this: Has EMC itself gone bananas?

Steve Duplessie, founder of Enterprise Strategy Group and one of the most respected and well-known storage analysts in the business, was beside himself in his “Steve’s IT Rants” blog earlier today.

“I see absolutely nothing logical in the move, and if I were NetApp, I would look at this as the world’s best Mulligan,” he wrote. “EMC has 19 de-dupe solutions already, owns Quantum practically, and already sells more target-based backup systems than DD. 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?

“The only possible play I can make semi-sense of is that they really didn’t want NetApp to have it, because NetApp’s only hope of making the deal make sense was to run very fast and very hard to dominate the global landscape with the DD stuff. That, in my opinion, was a long shot. This, in my opinion, is irrational,” Duplessie said.

Wow, why don’t you just come out and say what you mean, dude?

Dave Vellante of Wikibon was a bit more subdued in his blog.

“If NetApp counters and outbids EMC, EMC extracts 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.

Now it’s our turn.

Knowing EMC’s cocksure attitude and culture the way we do after covering it for more than three years here at eWEEK, here’s our take: This is no ploy to simply raise the bar so high for NetApp that it can’t jump over.

EMC wants more market share, and it has the money to spend. Data Domain has a very good product and a loyal installed base in a sector EMC eventually wants to dominate—the midmarket. EMC, DDUP and their shareholders win big in the $1.8 billion deal.

This is a no-lose situation for EMC. What EMC wants, EMC gets. Period. It will be a major upset if NetApp can overcome this serious obstacle.

We were unable to get a response from NetApp today on this turn of events. Tough statement to make, we know. As soon as we get one, we’ll post it here.