NetApp (NASDAQ: NTAP) has scaled back its NearStore virtual tape library (VTL) development efforts, raising speculation about what the data storage company's next move will be in the fast-growing deduplication market.
NetApp lost a bidding war with EMC (NYSE: EMC) last year for the right to acquire deduplication market leader Data Domain. The company also offers primary storage deduplication, but its dedupe plans for backup appear to be in question.
The company confirmed to Enterprise Storage Forum that it is shifting some development efforts away from its NearStore VTL.
"NetApp decided to adjust investment in its NetApp VTL product line to better align resources to market opportunities and demands," the company said in a statement. "We shifted some of the resources from our NetApp VTL development organization toward technologies that best serve our customer base and market demand such as virtualization and ITaaS [IT as a service] solutions. Therefore, our current investment in NetApp VTL is focused on helping our current customers be successful in their existing deployments and implementations. Customers will still be able to order NetApp VTL, as it will remain a price list item and will be quotable by NetApp and NetApp resellers."
Specifically, the company said it is abandoning its inline deduplication and IP replication development efforts for the NearStore VTL. The VTL already offers something of a hybrid approach between post-processing and inline deduplication that favors the greater speed offered by post-processing dedupe, and NetApp is also stressing the primary deduplication capabilities of its FAS storage arrays.
"Given the long-term priorities for NetApp, inline deduplication and IP replication are no longer a part of the roadmap plans for NetApp VTL," NetApp said in a statement to ESF. "NetApp sees the market moving beyond VTL, and as such is adjusting our investments and portfolio accordingly. Development will [be] focused on improving and hardening the current capabilities and adding new hardware support as needed.
"In primary and replicated storage, over 10,000 customers use NetApp deduplication on FAS systems, with 70,000 licenses deployed. NetApp continues to lead the industry, offering the unique capability of deduplication across all tiers: at the primary tier, at the secondary tier (for data replication), and at the tertiary tier (if customers are using an archive). To date, that accounts for almost 1 exabyte of deduped data."
NetApp's announcement had some observers wondering what the company's next move might be, perhaps a partnership with the likes of ExaGrid, Quantum (NYSE: QTM) or IBM (NYSE: IBM). Quantum was EMC's dedupe partner before the Data Domain acquisition, while IBM partners with NetApp on network-attached storage (NAS).
Enterprise Strategy Group data backup analyst Lauren Whitehouse said the company's statements leave open the possibility that it could focus on primary storage deduplication and leave the backup market to others.
"One could read that by deduplicating at the source system and taking advantage of NetApp snapshot and replication for backup/recovery, then it eliminates the need to dedupe downstream," she said.
Wikibon analyst David Vellante sees virtual server protection as a more likely focus for NetApp at this point than deduplication. Likely dedupe acquisition targets for NetApp would include the likes of Exagrid, Sepaton, Asigra, Vizioncore, Arkeia or FalconStor (NASDAQ: FALC), he said.
"None of these make sense to me though," said Vellante. "I think NetApp wanted Data Domain because it was push button meaning they could buy the company and allow it to run as a division that drove top line growth toward $5B in revenue," Vellante said in an email to ESF. "NetApp has a jones for $5B so it can try to keep pace with the big boys. So buying a tiny company in dedupe that's not growing as fast as Avamar/Data Domain doesn't make sense in that context. ... The problem for competitors is that EMC owns the two largest and fastest-growing dedupe players."
Vellante added, "Rather, if NetApp [is] thinking acquisitions, I think it would be looking in the virtualization space. NetApp is betting the company on virtualization and is intent on being the storage choice for virtualization. If, in fact, that's the case, which I think is clear, then I'd be making investments in that space if I were the NetApp board."
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