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IBM today said it is acquiring Diligent Technologies, a deal that's been rumored to be in the works for weeks.
The deal not only adds an established player in the emerging market for data de-duplication, but it may also help Big Blue reap additional benefits in market and channel opportunities.
The acquisition also puts IBM shoulder-to-shoulder with EMC, Sun and Hitachi Data Systems (HDS) all top-tier players boasting "de-dupe" solutions, which enable businesses to eliminate duplicate data, saving storage resources and money.
The purchase also presents some unique reseller opportunities and challenges, given Diligent's OEM relationships with Sun, HDS and Overland. HDS, specifically, has gained traction as a formidable Diligent OEM partner.
"IBM had no de-duplication story before, but now it has something it owns," said David Russell, a vice president at Gartner. "Hitachi is going to have to assess what it wants to do now, given the amount of money and resources they've dedicated to the Diligent relationship. They obviously value it but now it's no longer a differentiator between HDS and IBM."
Diligent, which was spun off from EMC in 2002, ignited interest well before it launched its first product in early 2006. The vendor's ProtecTIER enterprise data deduplication platform is deployed at 100 Fortune 1000 data center environments, including major telecoms, and global auto manufacturer, financial institutions and healthcare players.
While terms of the purchase were not disclosed, research firm Robert W. Baird & Co. estimates the price at about $200 million about 10 times Diligent's estimated annual sales. IBM said Diligent will be folded into the System Storage unit of its Systems and Technology Group, though the company said it has not yet decided whether it will re-brand Diligent's product.
"We are very happy about the acquisition and we've only heard positive feedback from customers and partners," said Doron Kempel, Diligent's chairman and CEO. "Everyone's comfortable with the IBM name and knows that Diligent is in the hands of a reputable company."
Kempel added that the IBM roadmap for Diligent is "quite extensive" and will include a new storage appliance offering in the near future.
"This is reflective of the fact that we've been doing something right, and it's significant that IBM chose us," Kempel said. He was also confident that current partners, such as HDS, would continue to sell the product.
"The first year will be about keeping the momentum going," Kempel said. "Hitachi and IBM will remain partners with Hitachi, having access to the same technology."
Sun, another Diligent reseller, is also likely to continue its partnership, which is centered within Sun's services group, Gartner's Russell said. Sun also resells the FalconStor product for its virtual tape library (VTL) products.
"We aim to keep all those relationships intact, in particular the Hitachi arrangement," said David Messina, manager for business development at IBM System Storage.
"We've got a great technology with Diligent and one that fits well for the midrange enterprise and even the smaller business organization that's looking for a tape-less backup system," said Messina, adding that IBM hopes to use its channel partnerships to expand into new market bases.
Yet it may not be smooth sailing, given that IBM is in direct competition with some of Diligent's resellers though Big Blue has told analysts it has no intention of changing the firm's partnership agreements.
"For Diligent, this is a good move, as it's now got a stable parent company but big parent companies also can bring some challenges," Russell said. "It will require a good support transition for IBM to come into those channels in the next year or so."
The Diligent buy marks the third storage-related acquisition for IBM this year. It purchased Israeli-based XIV in January, and announced last week its intention to buy FilesX, a maker of continuous data protection (CDP) software.
IBM's Diligent buy reflects a storage industry trend that's gaining momentum this year.
EMC is soon expected to announce a reseller deal with de-duplication provider Quantum. According to analysts at Baird, the expectation is that EMC will couple the vendor's de-dupe technology with one of its own midrange Clariion storage chassis for large-scale de-duplication.
There have also been rampant rumors that EMC will acquire Quantum.
"At the star of the year, some of these two-letter vendors weren't even OEMing a de-duplication technology, much less owning one," Russell said. "I expect that by the end of this year, lots of them will have at least one solution, possibly two de-duplication tools to offer."
The series of deals also means that most of the major players in high-end storage now have de-duplication offerings.
"They all have their dancing cards filled and most have placed bets on which partner to bring in," said Kempel, adding that while some vendors will offer more than one de-dupe solution, a majority of enterprises tend to want a single platform.
"It remains to be seen if other technology can play in data centers, but de-duplication is a complex domain and the opportunity is huge," he said.
That opportunity is tied not just into de-duplication's promise of reducing storage needs, but also to the fact that enterprises are feeling more secure about the technology now that it has thousands of deployments under its belt.
"It's catching on as it's becoming too compelling to ignore," Russell said. "The increasing number of adopters has reduced the risk some enterprises were worried about. The ability to save such money is dramatic."
A recent study of Fortune 1000 enterprises by TheInfoPro reports that 56 percent surveyed spent more on data de-duplication in 2007 than in 2006.
"The technology has not peaked, by any means," Russell added.
Article courtesy of Internet News