The market always makes the right choice. That's been the mantra of supply-side economists and venture capitalists as long as I can remember.
But in the case of EMC's takeover of Data Domain at the expense of NetApp, the question should be, the right choice for whom?
The word came down earlier today that NetApp was withdrawing its $1.9 billion bid for Data Domain after EMC bumped its counteroffer to $2.1 billion -- all cash. And even though Data Domain was initially more receptive to NetApp back when the two offers were roughly equal in value, the deeper pockets of EMC eventually claimed the prize.
So now, we have a very large company, EMC, that already has a fair amount of deduplication technology at its disposal by virtue of its earlier acquisition of Avamar Technologies and a close working relationship with Quantum, but has yet to deploy it in a way that eases dependence on its majorly expensive backup storage platforms. And we have a not-quite-so-large company, NetApp, that could offer a very compelling alternative to those large platforms, but has no real dedupe technology of its own to make it happen.
Certainly the right choice for EMC, but is it right for customers?
That ultimately remains to be seen because, as James Rogers points out on TheStreet.com, NetApp is not without options. The company is very likely to start looking at rival dedupe companies like CommVault and Falconstor, neither of which is the marquis provider like Data Domain, but could be had for a sight less than $1.9 billion. Of course, this assumes that none of the major platform vendors is interested in shelling out billions of their own for a company that specializes in appliance-based infrastructure.
For its part, EMC says it is jazzed by the prospect of adding dedupe to its backup and recovery portfolio, but it's still unclear why it would suddenly want to go full bore with Data Domain's technology when it hasn't really done much with the dedupe it already has, unless it feels that those systems simply aren't up to snuff.
In the meantime, it seems that EMC has bigger fish to fry than plain old backup. The company has been trying to shed the storage-only label for some time and reinvent itself as a full automation and management company to rival HP, IBM and the like. The recent launch of the Ionix line includes pieces of the Smarts, nLayer, Configuresoft and a range of other products designed to control everything from discovery and mapping to systems and service automation and management.
A big company like EMC should be able to handle both, but in the grand scheme of things, it seems dedupe is small potatoes compared to the kind of influence the company is going for.
So is the market always right? Well it certainly seems that the biggest kid usually wins the fight, regardless of whether that's best for everyone else on the playground.