EMC decides to Dantz to small business tune

EMC is buying backup software maker Dantz for "less than $50 million". The company produces Retrospect software, included, for one, in Maxtor's One Touch external backup disk, and has a vital hold on the SME market. It also has a retail and IP arm and a backup patent that may prove useful.

The $50m is peanuts in EMC terms. It paid $1.3 billion for Legato in 2003 - 26 million times more than Dantz' price tag. Legato's Networker is already a highly successful backup product for EMC. NetWorker is popular in enterprises but less so in the smaller enterprise space where Veritas' BackupExec and CA's ARCserve take the laurels.

EMC could easily produce an SME version of NetWorker by disabling some functionality and altering the packaging. It also has a great potential route to the smaller enterprise market through Dell.

However, Dell is not the only channel and it takes time to establish a new product in a new market. It's faster to ride into the market on a ready-made product. Dave DeWalt, executive VP of EMC's software group said: "Dantz helps EMC methodically enter the SMB software market and hit the ground running."

The smaller enterprise backup and recovery market is growing strongly, and is sized at $600 million. The whole smaller enterprise market is a strategic one for EMC (witness its sale of cheaper disk arrays, such as the AX100, through Dell). DeWalt confirmed as much: "Dantz is a strategic acquisition in line with EMC's strategy to extend our reach and focus on the fast-growing SMB market of next-generation high-growth customers."

In that case, the $50 million for Dantz could prove to be a bargain. With Dantz, EMC has gained a ready-made SME backup product with a good track record and a working channel, through which it can hope to sell Legato and Clariion products. It also gains its first toehold in the retail channel and, another first, in the Mac market as Dantz has Apple versions of its products.

Disk-based backup is becoming increasingly popular amongst SME customers and EMC now has a strong presence. EMC also has three traditional backup product lines: Legato and NetWorker; Dantz and Retrospect; and the ADIC tape libraries which it recently added.

We can expect it to start adding integration links and an ILM umbrella to these three lines. It also believes Dantz's technology and patents, along with EMC's disk-based backup and recovery, will form the foundation for Recovery Management, which it predicts will be the next major wave in backup and recovery. Dantz has at least one patent relating to the backup of just new and/or changed information to avoid wasting space.

Privately-held Dantz was founded in 1984 by Larry Zulch, current CEO and president, and his brother Richard, the chief technology officer and chairman. There are almost 100 employees and the company is backed by three venture capital firms who will now be licking their lips at the profit coming their way from this deal. Larry Zulch will report to Dave DeWalt and Mark Lewis, co-leaders of the EMC Software Group. Dantz itself wil continue to operate from its California office.

Dantz channel partners include Certance, Exabyte, Fujitsu, HP, Maxtor, Sony, Symantec and Toshiba, giving EMC a ready-made channel though which to upsell Retrospect customers to Legato's NetWorker, offer them low-end disk arrays, and introduce them to the delights of information lifecycle management.

Veritas and CA now face the certainty of much stronger competition. CA is going through management woes and its future is unclear. For both Veritas and CA though, questions might now be being asked about the wisdom of being software-only storage suppliers.

This story, "EMC decides to Dantz to small business tune" was originally published by Techworld.com.


Copyright © 2004 IDG Communications, Inc.

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