Quantum revealed the OEM deal Wednesday, and said it will have a new family of disk systems with the object storage later this year.

CEO Jon Gacek said Amplidata will eventually become part of Quantum’s cloud architecture, but a “big data” appliance will be Quantum’s first product using the technology. That product will incorporate object storage as a tier on a device running StorNext. Quantum is targeting petabyte-scale content and data analytics with the product.

“The first incarnation will show up as a tier underneath StorNext,” Gacek said. “Some customers will use it with tape, and some will use it to replace tape.”

Gacek said Quantum looked at several object-storage vendors but picked Amplidata because of its performance and the way its BitSpread erasure coding algorithm disperses data to guarantee accessibility.

“Amplidata’s performance is very strong,” Gacek said. “More important to me is Amplidata’s ability to do bit spreading to protect data and expand that to geospreading data, opposed to doing RAID and replication. That really lowers the cost of archiving.”

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.”

Quantum paid $12 million for Pancetera, which came out of stealth last August with its Pancetera Unite virtual appliance designed to optimize virtual machine backup. It added SmartMotion software in April, enabling Unite to push data from virtual machines directly to any NAS target without requiring staging servers with dedicated backup software.

By owning the technology instead of forging a partnership, Quantum is looking to develop new products for protecting and managing storage connected to servers running VMware.

“This gives us immediate value for DXi and virtual environments, and it will allow us to have unique roadmap items with DXi,” Quantum CEO Jon Gacek said. “The reason we went with an acquisition instead of an OEM deal is we can combine this with StorNext to develop solutions to manage storage – not just backup, but storage – in virtual environments.”

Gacek said Quantum will immediately offer Pancetera software with DXi systems sold for virtual environments. “We’re in deals now where we know that software will make the difference,” he said.

He said Quantum will also sell Pancetera to existing DXi customers, but he’s not sure if it will make Pancetera software available as a widescale standalone product. “We haven’t decided if we want to enable its value to our competitors’ customers,” he said. He said he expects Pancetera technology with StorNext to hit the market in an appliance for virtual data in 2012.

“Virtualization creates a lot of unstructured data,” Gacek said. “StorNext with Pancetera gives us the ability to get inside of a VMDK, and you can imagine some of the things we might do.”

Quantum tried attacking the VMware backup problem with OEM partner PHD, licensing its esXpress product in 2009. But that relationship fell apart last year. Gacek said the OEM deal didn’t give Quantum enough control over the technology.

Quantum is hiring most Pancetera employees, including founders Mitch Haile (CTO) and Greg Wade (VP of engineering) and CEO Herik Rosendahl.

“The issue for them was, they were going to be hard-pressed to convince companies to buy that kind of software from a startup,” Gacek said. “But the software is complete. We like how it can be supported and it fits well with what we’re doing with DXi.”

VMware is the only hypervisor that Pancetera supports. A Quantum spokesperson said there has been no decision yet on whether it will expand it to other hypervisor platforms.

Gacek, who replaced Rick Belluzzo as CEO in April, said the acquisition and the hire of Ted Stinson as senior VP of worldwide sales Monday shows “we’re in growth mode and we’ll be aggressive about making change.”

Quantum CEO Jon Gacek revealed details of the vendor’s product roadmap over the next year Tuesday during its quarterly earnings call. Along with source dedupe, Quantum will add a NAS interface to its DXi 6700 midrange backup system and enhance the DXi software’s capability for protecting data in virtualized environments. Gacek said Quantum is also planning to deliver its StorNext archiving software on appliances and upgrade its Scaler i6000 enterprise tape library with improvements for archiving, high availability and security.

After the earnings call, Gacek disclosed a little more about Quantum’s product plans to StorageSoup. He said the DXi source-based dedupe would consist of client software running on servers that would dedupe data over the wire to improve performance and require less bandwidth. “We have a competitor that sells that as two products,” Gacek said, referring to EMC. “We’ll sell it as an integrated solution. One product is better than two.”

Quantum’s source-side dedupe follows the EMC Avamar model. While EMC recently improved Avamar’s performance when used with its Data Domain target dedupe, customers still must buy both products to get source and target dedupe.

The inclusion of source and target dedupe in one product is not unique — most major backup software applications support both. But Quantum is most focused on competing with Data Domain, the giant in the disk backup market.

Quantum still lacks global deduplication, which dedupes across multiple nodes as if they were one node. Data Domain added that feature across two nodes last year with its Global Deduplication Array.

The midrange DXi 6700 is currently a Fibre Channel virtual tape library (VTL) interface device. Quantum will add multiprotocol support, just as it has for its enterprise DXi 8500 system that launched last year. The DXi 6700 will support VTL, NFS, CIFS, and Symantec OpenStorage (OST) interfaces. Quantum’s other midrange and SMB DXi devices are NAS-only.

With StorNext, Quantum is following the path Symantec recently set by offering its FileStor software on an appliance. But Gacek said Quantum will have several appliance choices for different markets and use cases. He said the goal is to make StorNext easier to implement than it is now as a software sale that requires customers to set up their hardware based on their workloads. “We’ll flavor the appliances to go after different types of customers,” Gacek said.

Gacek, who replaced Rick Belluzzo as Quantum CEO April 4, will also revamp the company’s sales force to assign sales teams based on customers’ size and industry instead of by geography and specific product.

Gacek said Quantum’s goal is to provide alternatives for customers and channel partners to EMC’s Data Domain disk backup and Oracle/Sun tape libraries.

EMC sold Quantum’s DXi software before acquiring Data Domain, and Quantum is still looking to recover from the revenue it lost when EMC dropped its OEM deal.

Quantum grew its branded disk and software revenue 38% to $113 million for the fiscal year that ended in March, yet its overall revenue of $672 million fell one percent because of the loss of OEM revenue. Its $165 million in sales last quarter was slightly up over the previous year, however.