EMC Trying to Outbid Netapp on Data Domain

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EMC Trying To Outbid Netapp On Data Domain

By: Steve Duplessie
2009-06-05

More to follow, but EMC just bid $30/share - or $1.8B for Data Domain. I see absolutely nothing logical in the move, and if I were NetApp, I would look at this...

...as the world's best Mulligan.

EMC has 19 dedupe 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?

Had they announced that they bought Sepaton for $400M or so, I would have said OK, good move. But this? This was nuts when NetApp was doing it at $1.5b. It seems super-nuts now.

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.

Is there ANYONE that thinks the DD stuff is so far superior to the other 800 ways to do dedupe these days that it's a fait acompli that the world is going to demand DD branded dedupe? I know it's good, but that good? The market already had DD overvalued from a pure earnings multiple perspective, and customer growth rates weren't all that impressive. So you double the cap??

I'm scratching my head at this point - but, maybe EMC is trying to get NetApp to spend even more than they wanted - their cash position is no where near EMC's, so maybe they are super-smart and trying to get NetApp to spend $2B - which will be a huge blow to their cash position. I doubt it, but that would be cool.

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Tag: EMC

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About the Author:
Steve Duplessie is the author of the "Steve's IT Rants" blog, and the founder and Sr. Analyst of the Enterprise Strategy Group.


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