Since the DoJ gave EMC an OK on the Data Domain acquisition, what’s next for NetApp? How about Quantum?
Through the Quantum->ADIC->Rocksoft dedup patents – cross-licensed to DD in return for 390,000 DDUP shares – Quantum owns core deduplication technology and sells a range of competitive D2D backup systems. With a current market cap of ~$200 million – and a 52 week high market cap of ~$400 million, they would be an excellent consolation prize should EMC win Data Domain.
Should NetApp buy Quantum?
With EMC officially over-paying for DD, this could be very smart for NetApp.
- Dedup appliance product line – ripe for the cost improvement that NetApp’s buying power would give them.
- Dedup patent portfolio – to help keep EMC honest.
- Good market positioning: “Buy the technology that EMC has licensed from us!”
- Way lower cost. Anti-trust concerns would keep EMC from bidding on Quantum, so unless another spoiler comes along – IBM, HP, Dell, HDS – a deal could be much closer to QTM’s 52 week high.
- A happy Silicon Valley home for ex-Data Domain staffers. No non-competes in California and most of the tech is already cross-licensed, which is about as clean as these things get.
The Don’t Gets:
- A strong brand that has recently benefited from lots of free publicity.
- Current market momentum.
- A strong team.
The StorageMojo take
Getting Quantum for a quarter the price that EMC is paying for DD would be worth it. NetApp will sell the stuff to current customers. They’ll certainly have better than a quarter the traction.
Nor have NetApp’s original business reasons for seeking the Data Domain changed. They are sucking wind with the never ending story of the Spinnaker integration and have done a good job training their customers on the benefits of dedup.
I’d be surprised if the Valley ibankers haven’t already set up a few meetings to suss out the potential. And I wouldn’t rule out a hostile bid, either. While some Quantum execs might not like it, the rank and file wouldn’t mind one bit.
Courteous comments welcome, of course. I worked for Quantum about 10 years ago while they were in the process of eviscerating the DLT franchise. I couldn’t watch, since I’d introduced DLT with DEC’s StorageWorks team in the early 90′s.