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Data Domain, 3Par reap post-IPO gains

Earnings reports show Data Domain and 3Par sales picked up after going public, despite increased competitive pressure.

New public storage vendors Data Domain and 3Par reported strong financial results for last quarter despite increased competition for both companies' signature products.

Data Domain reported revenue of $44.9 million last night in its third quarter as a public company. That was a 151 percent increase from last year and a 40 percent increase from the previous quarter. 3Par reported revenue of $30.8 million in its first quarter since its IPO. 3Par's revenue increased 51% over last year and 10% from the previous quarter.

Both continued to lose money, although backup vendor Data Domain cut its losses to $76,000 compared to $880,000 in the previous quarter. Systems vendor 3Par lost $1.9 million last quarter, and CEO David Scott said he hopes to reach profitability around the middle of this year.

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The CEOs of both vendors said rivals' attempts to challenge their core technologies haven't hurt at all. Data Domain has seen a rise of data deduplication products in the past year. The thin provisioning that systems vendor 3Par made its name on is showing up in products from large vendors Hitachi Data System and EMC.

Data Domain tunes out deduplication "noise"

Data Domain CEO Frank Slootman said while there has been "a lot of noise" around deduplication, "I think we came out the other end in very good shape." He said Data Domain added 341 customers last quarter for a total of 1,537, and the nearline storage system it launched last quarter has been well received.

Perhaps Data Domain's biggest challenge lies ahead. Virtual tape library (VTL) rival Quantum last week disclosed it has signed an agreement with a "major OEM" to license its deduplication technology. Industry sources say this is the long-rumored deal with EMC, which has deduplication backup software from its acquisition of Avamar but has not offered deduplication on its VTL product. VTL vendors FalconStor, Diligent Technologies and Sepaton also have data deduplication.

'Thin is in' for 3Par

Scott said Hitachi's and EMC's attempts at thin provisioning have actually helped 3Par. Thin provisioning gives customers more flexibility when allocating storage, and was 3Par's major differentiator when it began but others have come up with their versions of the technology.

"That's been great for us because now we get invited into deals as people try to compare thin provisioning offerings," Scott said. "And they're finding out (EMC's) virtual provisioning and (Hitachi's) dynamic provisioning are not really thin provisioning because they have to reserve copious amounts of storage in pools up front."

Scott also said he saw immediate benefits from 3Par's first quarter as a public company.

"There were prospects who would not have considered us when we were a private company, but now they see a balance sheet with $120 million and they feel much more comfortable," he said. They'd probably feel more comfortable if 3Par were making money. Scott said the goal is to become profitable on "net income excluding stock options" around the middle of the year.

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