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» VIEW ALL POSTS Oct 28 2010   3:34PM GMT

Quantum still digging out of dedupe hole left by EMC



Posted by: Dave Raffo
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Quantum has aggressively chased the data deduplication disk backup market over the past year with a complete product refresh of systems beginning with SMBs and stretching to the high end of the enterprise. Still, the vendor has yet to make a major impact from a sales perspective.

Quantum reported earnings of $168 million Wednesday, coming in near the low end of its previous guidance, far below Wall Street expectations and down from $175 million in the same quarter last year. Its disk and software (deduplication) revenue was $30.6 million, representing a small slice of that market.

While the numbers don’t provide a ringing endorsement of Quantum’s product line and strategy, it does show progress, CEO Rick Belluzzo said. Belluzzo prefers to compare revenue to the previous quarter than last year’s numbers that included revenue from an OEM deal with EMC that ended after EMC bought Data Domain. Belluzzo said Quantum’s branded (non-EMC) revenue rose $13.2 million sequentially and branded DXi sales increased 19% over last year.

Quantum’s largest system, the DXi8500, will begin shipping in the next few weeks.

“We’ve worked over the last six months to transition the business,” Belluzzo said. “There’s a lot of energy and excitement around these products.”

As for the results, he said, “Of course this isn’t good enough and it is where we have focused our investment both in terms of enhancing our product offering and building greater revenue or market momentum.”

Quantum’s data dedupe strategy is to position its DXi products as the major alternative to EMC’s market-leading Data Domain appliances and go after non-EMC customers. It is building its channel and industry partnerships around that plan.

“There are a lot of competitors out there, but when it comes to target-based dedupe, it quickly becomes data Domain and us,” Belluzzo said. “When a customer is building a system that’s optimized for deduplication and replication, Data Domain is always in the deal.

Quantum’s strategy has made it an ally of NetApp, although not implicitly. NetApp was left with a hole in its backup product line after EMC outbid it for Data Domain last year, and many in the industry thought it might turn to Quantum to fill that gap. NetApp hasn’t done that with a direct partnership, but this week it said it is reselling Fujitsu’s CS800 S2 Data Protection Appliance in Europe and the Fujitsu appliance uses Quantum’s dedupe software. Belluzzo said Quantum is also working with NetApp channel partners to provide a dedupe alternative to Data Domain.

But there is no official partnership between the two vendors. “We have a good relationship with NetApp, especially in some geographies,” Belluzzo said. “It’s a little bit of best of breed of NetApp disk and our deduplication. It’s not uniform, or pushed at the highest level at NetApp, but it often happens at the channel level.”

Fujitsu this week disclosed that it was the dedupe OEM partner that Quantum talked about in January but couldn’t name. That was no surprise because Fujitsu started shipping its dedupe around that time, and its product description sounded just like DXi software. Belluzzo said Fujitsu won’t make up for the lost revenue from EMC, though.

“It isn’t an EMC-like agreement, that’s for sure,” he said.

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