Quantum Corp. was left standing on the sidelines while EMC Corp. and NetApp duked it out for Data Domain, yet the outcome had tremendous impact on Quantum. As EMC's data deduplication OEM partner, Quantum's business plan changed significantly after EMC won the bidding war and paid $2.1 billion for Data Domain's deduplication platform.
In a Q&A with SearchDataBackup, Quantum CEO Rick Belluzzo said his company is ready to move on by releasing a new midrange network-attached storage (NAS) dedupe system, and reaching out to new storage OEMs and channel partners vacated by Data Domain. He also maintains Quantum is ready to take on EMC/Data Domain head to head.
"Now EMC is definitely more of a competitor than a partner when it comes to deduplication," Belluzzo said. "The situation certainly was a bit unsettling, but we're moving on to compete, deliver new products and work with new partners. The EMC-Data Domain situation changes our priority, and our focus now is more about building our branded business. Between us and EMC, we've sold about 2,000 [deduplication] systems. Now it's up to Quantum to prove we can grow."
SearchDataBackup: During your earnings call Wednesday, you said sales last quarter were hurt by misperceptions about Quantum caused by the EMC-Data Domain deal. What were those misperceptions?
Belluzzo: We were referring to all the debate about why EMC did this. People gave reasons from lack of success for our technology to EMC trying to do more damage to NetApp. Data Domain used that against us. There was a flurry of discussion and debate that slowed the market down and created quite a bit of instability.
You also hear that now we don't have a path to market, and we're not going to be successful in the deduplication systems business. We think those claims are wrong. We have a large Quantum installed base, our salespeople will take this forward, and we will find new partners. The deduplication competition is focused, and large players have not developed solutions as is proven by NetApp's attempt to buy Data Domain.
SearchDataBackup: Why do you think EMC bought Data Domain?
Belluzzo: EMC always indicated they saw deduplication as crucial and they wanted to have more of it. They were relying on our technology, but over time they were going to have to think of adding deduplication. Deduplication for storage is like virtualization for servers -- it has an impact and you need to be there.
They were also concerned that NetApp would gain strength if it acquired Data Domain. Every analyst report I read said Data Domain was a good match for NetApp in terms of channel and their place in the market, and that was a risk for EMC. Third, there's no doubt that Data Doman has had more momentum and had been in the market longer than us. EMC made the decision to go make this happen.
SearchDataBackup: Do you think EMC will continue to sell your software, at least in the short term?
Belluzzo: For the next three quarters we expect to have revenue from EMC similar to what we had last quarter. There's a lot of complexity behind what that means, but our revenue level will be constant. We believe they will continue to sell us, but you'll have to ask them.
SearchDataBackup: Were you looking for other OEM partners before EMC bought Data Domain?
Belluzzo: Before, we were focused on EMC. This change frees us up to consider other options. This move by EMC elevates deduplication in the industry. More companies are coming forward and saying, "How can we work together?" As soon as the acquisition thing heated up there were conversations, but we have a long way to go yet.
SearchDataBackup: Do you worry about competing with OEM partners, whether it's EMC or new partners?
Belluzzo: We will compete with EMC. While we partner with EMC on tape, we will definitely compete more on deduplication. We'll be very selective on that, but there will be growing competition. We competed aggressively with Data Domain. We tried to have a go to market strategy where we didn't compete with EMC. Where we have an OEM partner, we work to achieve that.
SearchDataBackup: Who else are your main deduplication competitors?
Belluzzo: The competition has been so heavily Data Domain. As you go down the list, it gets so much smaller. Next down the list is NetApp, even though it takes a different approach. Then it tends to be smaller players, like ExaGrid and Sepaton. HP and IBM seem to be in their own places. It's still really Data Domain and us.
SearchDataBackup: You've said it took time for your first-generation DXi products to mature. Do you think they were rushed to get dedupe products out there?
Belluzzo: We should have taken more time to optimize the product, the hardware, software, all the pieces. We've learned a lot about vast and complex systems, and as we deployed it we learned more about what kind of platform you need to run that kind of software. We learned those lessons quickly. We launched the DXi7500 fairly soon afterwards and made a lot of improvements that allow us to scale the technology. It's not that the first product didn't work, it's that the use case profile was narrow. That was biggest issue, it was a narrow use case in a market that looks for breadth.
SearchDataBackup: What do you see as your competitive advantages over Data Domain?
Belluzzo: Our first competitive advantage is scalability. We can scale from a couple of terabytes to 200-plus terabytes in a single architecture. Second, our virtual tape library (VTL) performance and ability in the Fibre Channel environment is particularly strong. And we integrate with tape. From edge to core, we cover small systems to very large systems and it's all tightly integrated with tape and a management layer that lets you manage all that in a single pane of glass. We also have policy-based deduplication that lets you use different deduplication methodologies or no deduplication at all. Ours is a higher end enterprise-class product. A lot of that today goes through EMC.
SearchDataBackup: Will your new midrange platform be different than the DXi7500 Express architecture?
Belluzzo: Yes. It will be very much focused on NAS. That's a market segment we haven't been in as much. It's new hardware, expanded software, and a whole set of changes to position us better. It's always been our strategy that EMC would focus on the enterprise segment and we would focus on the 50 TB-to-60 TB midrange segment with our branded technology.
SearchDataBackup: Your revenue was down 28% year over year last quarter. Along with the EMC-Data Domain uncertainty, how much was the economy a factor?
Belluzzo: The economy is still challenging. North America is improving. Europe was particularly weak. We saw a lot of evidence of deals being pushed from quarter to quarter. Also, remember, there are certain segments in the tape market that we are exiting because of lower margins. About half of the decline was business we decided to get out of. The other half is economic driven.
SearchDataBackup: How do you see the tape business now?
Belluzzo: There are certain segments that are declining, especially in the lower end. Those are the segments we're getting out of. But tape continues to be a solid part of our business. A lot of DXi deals include disk and tape together. We find that tape's role is changing, yet it's still an important part of the tiered storage strategy that people have.
SearchDataBackup: Has Oracle's acquisition of Sun helped you in the tape business?
Belluzzo: We've seen a number of deals where customers who were StorageTek customers [before Sun acquired StorageTek] are looking to change. We've won accounts from long-term STK customers. Attention to that business was waning from Sun, and we expect it to wane further from Oracle.