Dell first entered the bidding at $2.15 billion before Insight countered at $2.27 billion. Dell made another offer last week of $2.32 billion and increased that price before closing the deal. The bidding was reminiscent of Dell’s battle with Hewlett-Parckard (HP) for storage systems vendor 3PAR two years ago. HP won that battle, and paid $2.35 billion for 3PAR.

The shareholders of Dell and Quest must approve the deal, and Dell said it expects the transaction to close by the end of October.

Quest sells backup software for virtual and physical servers and replication in its data protection portfolio. It also has systems management, security and workspace management software. While Dell mentioned Quest’s data protection in its release, none of Quest’s data protection products were highlighted. Dell specifically cited Quest One Identity and Access Management, Foglight, Windows Server Management, and Database Management in the press release.

Quest’s major backup products include NetVault — acquired from BakBone Software last year — for physical servers and vRanger Pro for virtual machines. It also sells LiteSpeed data reduction software for Oracle and SQL database backups.

Dell will discuss the deal with press and analysts this morning. For more details, see our story on SearchDataBackup.com.

NetApp executives played down the speculation. They said they didn’t need a backup platform, but they wanted Data Domain because its leading position in data deduplication for backup was disruptive and driving strong revenue growth. EMC, which paid $2.1 billion to outbid NetApp for Data Domain, has continued to grow that business despite a plethora of competitors.

NetApp has since made several smaller acquisitions – the largest was LSI’s Engenio systems division – but stayed away from backup. But a few rough quarters have caused NetApp’s stock price to shrink, and now the rumors have returned that it is hunting for backup.

A Bloomberg story today pegged backup software vendor CommVault and disk and tape backup vendor Quantum as the main targets. The story was based more on speculation from Wall Street analysts than sources who said any deals were in the works, but such an acquisition wouldn’t surprise many in the industry.

“I think NetApp needs to acquire companies and technologies, and bring in talent from the outside,” Kaushik Roy, managing director of Wall Street firm Merriman Capital, told Storage Soup.

CommVault and Quantum were among the companies believed to be on NetApp’s shopping list in 2009. A few things have changed. NetApp signed an OEM deal to sell CommVault’s SnapProtect array-based snapshot software earlier this year. That deal is in its early stages. NetApp hasn’t sold much CommVault software yet, but perhaps the partnership is a test run for how much demand there is and could lead to an acquisition.

Quantum was EMC’s dedupe partner before it bought Data Domain. If NetApp bought Quantum in 2009, it could’ve been taken as NetApp picking up EMC’s leftovers. But Quantum has revamped its entire DXi dedupe platform since then, expanded its StorNext archiving platform and acquired virtual server backup startup Pancetera. Those developments could prompt NetApp to take another look.

There are also smaller dedupe vendors out there, most notably Sepaton in the enterprise virtual tape library (VTL) space and ExaGrid in the midrange NAS target market.

However, people who suspect NetApp will make a move expect it will be a big one. CommVault would be the most expensive with a market cap of $1.9 billion and strong enough revenue growth to stand on its own without getting bought. Quantum, which finally showed signs of life in its disk backup business last quarter, has a $524 million market cap but most of its revenue still comes from the low-growth tape business.

Storage technology analyst Arun Taneja of the Taneja Group said buying CommVault would make the most sense if NetApp wants to take on its arch rival EMC in backup. While NetApp was the first vendor to sell deduplication for primary data, it is missing out on the lucrative backup dedupe market.

“NetApp needs to get something going in the data protection side,” Tanjea said. “They’ve missed millions of dollars in the last two years [since EMC bought Data Domain].

“If they want to be full competitors against EMC – and what choice do they have -– CommVault would be better for NetApp to buy. In one fell swoop, CommVault covers a lot of ground against EMC — backup software, dedupe technology at the target and source, and archiving, too.”

CommVault Tuesday reported revenue of $84 million last quarter, up 18% from last year and 11.2% from the previous quarter. The results were a big jump from two quarters ago when CommVault slumped to $66.3 million in revenue when it missed its projections by a wide margin. CommVault also seems to have gained on market leader Symantec, which last week reported its backup and archiving revenue increased five percent over last year.

While Simpana 9 drew a lot of attention for adding source deduplication to the target dedupe in the previous version, it also leans heavily on replication and snapshot technology to create recovery copies of data without moving the data. These technologies were cited by Gartner in its most recent Magic Quadrant for Enterprise Disk-Based Backup/Recovery that placed CommVault at the head of the leaders group.

“The old backup methodology of managing the backup stream is no longer efficient,” Hammer said. “The backup copy today is your persistent long-term archive copy. The industry has shifted into managing data using snaps and replication as the primary way of managing and moving data. We can seamlessly create a long-term non-corrupt point-in-time copy. The backup business is now a more comprehensive data management business.”

Hammer also said CommVault will not follow Symantec’s lead of selling its backup software on branded appliances. CommVault sells Simpana on hardware from partners such as Dell, and Hammer said he will continue with that strategy.

“We don’t want to get into the hardware business, for a lot of reasons,” he said. “At least not on our own. We will provide our software to partners who embed it and sell it on hardware.”

CommVault’s sales spike last quarter came despite a drop in revenue from its Dell OEM deal. Dell accounts for 20%of CommVault revenue, but it decreased 13% year over year and 10% sequentially last quarter. Hammer said that was in part to a drop in sales to federal government, which make up a large part of its sales through Dell.

As for cloud backup, Hammer said CommVault is seeing large deals through managed service providers (MSPs) while enterprises are taking a slow approach. “But whether enterprises are going to deploy to the cloud yet or not, cloud capability is one of the requirements they’re looking for,” he said.

The vendor set out to improve its information management capabilities in the new version by redesigning its Web interface for search (using Microsoft’s FAST) and overhauling its data mining, classification, records management, work flow management, role-level access and legal hold features.

CommVault calls the process Retention Lifecycle Management (RLM), which CommVault’s information access management director Simon Taylor compared to ILM for compliance.

When asked if Simpana was crossing into content management, Taylor said: “We are going in that direction. We are able to retain objects, and classify and virtualize them over time. We also move data across tiers to the cloud. It’s about better retention and access to information.”

Enterprise Strategy Group analyst Brian Babineau CommVault said has made it easier to search and classification information with Simpana 9 by adding search within search and automatically tagging data based on pre-defined criteria.

“CommVault has always been strong on the capture side,” he said. “[Simpana] could manage the data in a backup or archive workflow. Now, it’s made it much easier from the GUI to the actual information classification so you can navigate it. So now users can actually find data and take more action with it.”

He said the addition of templates that let users customize workflows also simplifies records management, but a key area to watch will be Simpana’s search performance.

“If you have existing rules in a content management and want to add email, you don’t have to connect email to your content management system, you can create a template in Simpana,” he said. “Of course, I think they will still be questioned on their search response times.”