NetApp acquires Data Domain

Developments of the week in storage

NetApp blew its top last week with the acquisition of data deduplication vendor Data Domain for $1.5 billion.

Watch a slideshow of the hottest M&As of 2009.

Data Domain, which makes in-line processing data deduplication appliances, claims AT&T and the U.S. Defense Department as its customers. The company's sales last year amounted to $274 million, with net income of $21.6 million.

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NetApp blew its top last week with the acquisition of data deduplication vendor Data Domain for $1.5 billion.

Watch a slideshow of the hottest M&As of 2009.

Data Domain, which makes in-line processing data deduplication appliances, claims AT&T and the U.S. Defense Department as its customers. The company's sales last year amounted to $274 million, with net income of $21.6 million.

In acquiring Data Domain, questions popped up as to the possible overlap of the companies' two products. NetApp markets its Advanced Single Instance Storage (A-SIS), a block-level deduplication capability for its NearStore and FAS systems.

A-SIS can be used to deduplicate primary, backup and archival data. Will NetApp keep both forms of deduplication? NetApp's Chief Marketing Officer Jay Kidd wouldn't answer that question, saying that it was too early yet.

The acquisition should close in two to four months. And we can only hope that it will be more successful than NetApp's acquisitions of Topio and Spinnaker. Only Decru has been successfully integrated into NetApp's product line.

Analysts and press alike have skewered Data Domain's inability to scale. It makes bigger and bigger appliances but so far has not clustered its appliances to let them grow like competitors such as Sepaton and Exagrid.

The deal brings NetApp lots of new customers for its FAS systems. Paying $1.5 billion for a $21.6 million company may make sense for NetApp if it is able to successfully integrate Data Domain.

Will we see more acquisitions of deduplication companies? Looking back, IBM bought Diligent. Sepaton remains independent, but with a new target on its back. FalconStor, Ocarina and StorWize too are now more attractive.

Read more about data center in Network World's Data Center section.

Deni Connor is principal analyst for Storage Strategies NOW and host of both the Masters of Storage and Masters of Servers Solution Centers.