Quantum Seeing 'New Opportunities' After EMC's Data Domain Buy

Quantum CEO Rick Belluzzo sees a competitor wiped off the marketshare chart and possible new opportunities in the channel for his company, which may eventually get less attention from the storage giant for its deduplication software.

The news July 20 that EMC had taken over 82 percent of Data Domain's outstanding stock shares only eight days after outbidding NetApp has some people's heads spinning.
We're not talking about a small transaction here. EMC is ponying up $33.50 a pop per share in cash; the deal ultimately will be worth somewhere between $2.1 billion and $2.3 billion upon its completion, which EMC says will be by or before July 31.
Even the red-tape-rich U.S. Department of Justice, Securities and Exchange Commission and Federal Trade Commission fast-tracked their approval of the transaction. This is almost unheard of in this down economy. The moral of the story: When the largest storage company in the world decides to do something, it simply doesn't waste time for anybody or anything.
All of this speedy business has been more than simply a passing concern for Quantum, a longtime EMC partner that supplies DXi deduplication software and virtually all the tape storage that EMC resells. With Data Domain's well-regarded deduplication appliances now in its product lineup, EMC's cup is now overflowing with "dedupe."
EMC bought Avamar Technologies in 2006 for $165 million, then signed its partnership with Quantum a year later. Now it owns Data Domain, which has a lot of loyal customers in the midmarket, where EMC wants to expand.
How many dedupe choices does one company need? And where does this leave Quantum, which relies on EMC as one of its biggest sales channels?
"Developments certainly were different than we would have thought, early on in the process," Quantum CEO Rick Belluzzo told eWEEK. "It moved pretty fast, with the government approval and all. But we were not caught flat-footed. We've been talking to EMC all along. The more important question is, what does this mean for us?
"This is a very exciting space in the industry -- it's probably the hottest segment of the storage industry. We continue to feel very good about the core assets that we have in deduplication. We've announced some new products around virtualization and VMware, and we're aggressively driving our R&D agenda to have better products and take the technology further."
However, the deal does change the "range of opportunities" Quantum has with EMC, Belluzzo said. Data Domain will be moving in as a third participant in the EMC deduplication feature catalog and leaving Quantum -- and also Avamar -- less latitude in the sales channel.
"We'll continue to work with EMC in the best way possible, but at the same time, we'll pursue other alternatives to strengthen our position in the market," Belluzzo said.
Pursuing other alternatives
What might those alternatives be?
"It's a pretty fast-developing market, and the reality is that this move creates opportunities as well. We've lost a competitor, for one thing," Belluzzo said.
"Data Domain was our biggest competitor, they're going to have a new agenda. They're going to be pulled more into the EMC direct business; the channel will be more available for companies like Quantum who come up with products that fit their needs.
"All the other competitors in the industry don't have good solutions. NetApp, by their own admission, felt they needed to make a move, and they were not successful -- so what could that mean about their product strategy? Data Domain partnered with HDS [Hitachi Data Systems], what are they going to do now?"
Belluzzo said that this (the EMC-Data Domain merger) could be a defining moment in the marketplace from a Quantum perspective.
"Being one of the few players with a core technology in this area, we think it still ultimately means that we have opportunity," Belluzzo said. "It's up to us to be positioned for the most success."

Chris Preimesberger

Chris J. Preimesberger

Chris J. Preimesberger is Editor-in-Chief of eWEEK and responsible for all the publication's coverage. In his 15 years and more than 4,000 articles at eWEEK, he has distinguished himself in reporting...