Nemertes Impact Analysis:

The Battle Over Data Domain Is Driven by Virtualization's Effect on Storage

As Network Appliance (NASDAQ:NTAP) and EMC (NYSE:EMC) fight for Data Domain (NASDAQ:DDUP), virtualization is the invisible factor. Virtualization leads to exploding SAN (Storage Area Network) requirements, sometimes bringing virtualization projects to a halt, according to participants in Nemertes' Virtualization research. A major issue is Virtual Machine (VM) sprawl, in which a production VMware (NYSE:VMW) virtualization environment generates 1000's of Virtual Machine DisKs (VMDKs) potentially eating-up Petabytes of expensive SAN storage. Data deduplication facilitates secondary disk storage, releasing SAN storage with 40x-60x real-time VMDK size reduction, according to Data Domain and competitors such as IBM (NYSE:IBM - OEM of Data Domain) and HP (NYSE:HPQ). Both EMC and NetApp already offer deduplication solutions though EMC has more overlap in its product lines.

Impacts:

Enterprises: Plan virtualization efforts around storage requirements and sprawl management. Deduplication is an expensive technology but uncontrolled SAN growth can break the bank.

Vendors: An EMC acquisition takes a competitor out of the market. A NetApp acquisition creates a stronger competitor.

Investors: With IBM's acquisition in 2008 of Diligent Technologies, FalconStor Software (NASDAQ:FALC), Quantum (NYSE:QTM), and privately held Sepaton remain the pure-play vendors.

Ted Ritter, senior research analyst

http://www.nemertes.com/benchmarks/desktop_and_server_virtualization_benchmark
http://www.networkworld.com/news/2009/060509-data-domain-asks-shareholders-to.html?hpg1=bn

Sign Up To Receive Nemertes Impact Analysis By E-mail

Follow Nemertes Research on Twitter