EMC launches rival bid to acquire Data Domain

In response to EMC’s rival bid to acquire data deduplication vendor Data Domain, NetApp has today issued revised offer to $1.9 billion.

Yesterday, information infrastructure vendor EMC launched a rival bid to acquire deduplication vendor Data Domain for $1.8 billion, trumping competitor NetApp’s bid by 20% and offering to pay in cash.

"Our substantially superior proposal is a win-win for both companies," said CEO Joe Tucci in a statement. "The combination of EMC and Data Domain technologies will strengthen EMC’s leadership in the fast-growing and very important next-generation disk-based backup and archive market, and will also result in a business larger than a billion dollars for EMC in 2010."

The move reflects the value which both companies see in deduplication technology, even though it threatens their storage equipment sales. ‘Dedupe’ uses algorithms to find out when data is being stored more than and deletes unnecessary copies, thereby reducing the amount of storage media required.

For example, a company logo in a Powerpoint presentation, modified and emailed across many different departments, will still only be stored once on a company server, immediately saving hundreds of megabytes across an entire organisation.

Data Domain, a pioneer in the dedupe field, uses the technology in its back-up, archiving and disaster recovery solutions, and in doing so is making money as the sector as a whole sees revenues decline. Revenues for the company reported first quarter of this financial year were $79 million, up 50% increase from the year before. EMC, meanwhile, saw its revenues fall 9% to $3.15 billion in its equivalent quarter.

Data Domain’s share price rose slightly following the announcement.

Deduplication and solid state storage

Deduplication technology is expected to grow in value as more organisations turn solid state drives for storage. SSD technology is presently far more expensive per megabyte than spinning hard drives, so a technology that drastically increases the efficiency of what is being stored may become mandatory.

EMC clearly hopes that deduplication will provide the cost-effectiveness boost that sets enterprises on the road to solid state, and therefore refresh their storage arrays. At its recent user conference, EMC made plain its intention to capitalise on the switch to solid state. Tucci described SSD as the future of the storage industry, but said that prices must come down before widespread adoption will take off.

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