I had a brief dialog with an old co-worker of mine because he is being recruited by Data Domain (DDUP). He is currently with a smaller IP storage vendor and, like myself, is good about keeping options open. I honestly wonder what the future is for Data Domain. It looks more and more like the “dedicated” de-dup appliance market is shrinking.

Why do I think such a silly thing is happening, while Data Domain’s revenue growth has been very nice? Mainly, because the de-dup appliance market is in fact shrinking! Not because less people are interested in de-duplication technology, but because the competition is heating up. I’m going to use VMWare as exactly the WRONG example for comparisons. A virtualization layer for Operating Systems is a HOT technology right now, and will continue to be a HOT technology. How/Who provides this layer is clear today! VMWare owns the market(55%), followed by Microsoft and SWSoft (8%), and far, far behind are the rest of the market players. So, why do I use VMware as an example? Because going back over the last couple of years, VMWare has LED the virtualization market in functionality and features. They have maintained market share, and grown market share!

In comparison, Data Domain, only 18 months ago held 100% market share. They are sitting at around 40%-50% as of today. They are losing market share not, to other “up-starts” but rather to some MAJOR players from the storage marketplace. Companies like NetApp, EMC, Symantec, Comvault, and Computer Associates have all made major releases of features in existing product sets that will erode the Data Domain market. If a customer already owns Veritas NetBackup, why on earth would they buy a Data Domain appliance for back data de-duplication, rather then just license Pure Disk, for a very similar functionality. When a customer has standardized on NetApp filers, why not just license ASIS, rather then invest in an entire new storage system?

I honestly wish Data Domain the best of luck! I do however think they need to invent something else to maintain as a long term company. They are at a delicate point as a company today! They have made the leap to being public, most folks stop thinking at that point, that is the end game. I, however, feel you need much further thinking. You know have stockholders to protect.

As always, comments welcome!