Straight Talk from EMC About DDUP vs QTM in Their Portfolio

I just got off the phone wtih Rob Emsley and Dave Farmer from EMC where we had a much-awaited conversation about what their plans are for the Quantum-based products now that they own DDUP. They were actually more candid than I expected them to be.

First, they wanted to reassure me (and customers who have already purchased Quantum-based systems) that they didn’t just hang their existing customers out to dry when they bought Data Domain.  As Quantum enhances their software (which they are doing), they will make those later releases of software available to their existing customer base as long as they are compatible with the current hardware (which they most likely will be for the foreseeable future).  In addition, if a customer wants to buy an additional 1500 or 3000 from EMC, they’ll be happy to sell it.  I believe they’ll even sell one to a customer who hasn’t bought one yet.

But imagine being an EMC sales rep.  The Data Domain system will have better margins (no royalties, it’s perceived as being the “up and comer” whereas the 1500/3000 are the ones that EMC passed over to buy Data Domain.  Data Domain’s fastest system (the 880) is more than twice the backup speed of the 3000 and up to 20 times its restore speed.  Yes, I know the 3000 says it can have more attached storage, but trust me; it comes at a price.  Of course you’re going to lead with the Data Domain system.

Rob Emsley said it best on the call, “We will continue to offer the one, but we will sell the other.”  I couldn’t have said it better myself.

You may be wondering how this jives with Rick Belluzzo’s comment to SearchDataBackup’s Dave Raffo that “for the next three quarters we expect to have revenue from EMC similar to what we had last quarter.”  Of course they do! Remember that EMC pre-paid $40-50M in royalties last quarter to help keep Quantum afloat.  But Quantum is recognizing that revenue over four quarters (standard accounting practice).  They’ve already recognized one quarter’s revenue, and there’s three left.  Of course EMC revenue will remain constant over the next three quarters! Way to spin the obvious, though, right?

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