Editor's note by Andrew Martin, Group Publisher, AOPG
Let’s start by confirming that doing nothing was not an option for Commvault, so an acquisition is better than trying to sell their way out of their position. That’s the positive aspect of this acquisition.
However, when we look at other aspects of this acquisition, we feel that Commvault is not heading in the right direction here, and the purchase of Hedvig is unlikely to be the magic pill that turns the business around.
For a long time, the old management at Commvault tried to turn the company into a “storage and data management company”. The reality is, data management sounds great at a strategic level, but rarely do companies allocate budget for “data or storage management”. It is often assumed that storage management will be included within the enterprise storage budget, and hence the enterprise storage vendors usually include these function in their offerings (albeit lacking vendor-agnostic capability). As a result, despite Commvault “insisting” they were a data management company, we would contend that continued mainly to sell backup and archive.
This acquisition of Hedvig moves Commvault on from data management to trying to take on the primary storage vendors head-on with a disruptive technology stack which eats into the pie of companies like NetApp and Hitachi (two longtime Commvault partners).
So why are we not fans of this acquisition?
In our view, Commvault should have focused on where they are known. Part of the reason they are hurting is that they are caught with a legacy product in a market that is being hit from all sides by disrupters like Rubrik, Zerto and Cohesity. Most likely those companies were not up for sale, or possibly not within the price range that Commvault could stretch to, but acquisition costs aside, that’s what we would have loved to see Commvault doing.
They have enormous amounts of man-years amongst their ranks with deep understanding on how to protect data. They have a customer base that is loyal and “loves” them for protecting their data, but they are being hit with disruption in the space. If Commvault acquired some of those disrupters, then we believe they could leverage their history to turn the company’s fortunes around. That rich legacy won’t help them in the space where Hedvig play.
The above is, of course, opinion and our opinion could be wrong. We hope we are. Commvault has a strong heritage in the region, with good people and a great ecosystem of local partners. If they have spotted something in Hedvig that we have missed, then we will certainly be applauding their success.
Full press release as follows:
Commvault, a leading provider of software for the management of data across cloud and on-premises environments, today announced that it has entered into a definitive agreement to acquire software-defined storage (SDS) innovator, Hedvig, for total consideration of $225 million, which includes the purchase price and ongoing employee retention.
Gartner expects that, by 2023, software-defined storage (SDS) instantiations of vendor storage OSs running in the cloud will become the dominant method of building multi cloud storage infrastructures.
This move to cloud and multi cloud environments, together with cloud native applications is driving competitive advantage for companies of all sizes; yet the acceleration of data fragmentation is negatively impacting business outcomes. This rapid data growth, generated from a variety of sources stored both within on-premises environments and in the cloud will continue to create significant governance, security and management challenges.
“Multi cloud data management is a hard problem for customers to solve, and that translates to value. Commvault’s acquisition of Hedvig is an astute strategic move that allows Commvault to differentiate and enhance its offerings – which broadens its addressable market. We believe this increases the value Commvault can bring to these increasingly complex customer problems,” said Crawford Del Prete, President, IDC.
“This acquisition demonstrates how Commvault is leading the way towards the intersection of storage and data management,” said Sanjay Mirchandani, Commvault CEO. “We believe joining Hedvig’s innovative software-defined storage capabilities with Commvault’s industry-leading data protection reduces fragmentation and leapfrogs other solutions in the market.”
For years, Commvault has evolved its portfolio to help thousands of long-standing customers of all sizes globally, protect, manage and use their data more effectively. This is demonstrated by the 600-plus petabytes of data managed by Commvault software in the cloud today.
Hedvig drives significant operational efficiency, addresses the data sovereignty problems stemming from data governance laws and enables hybrid cloud and multi cloud capabilities natively. Operational efficiency is achieved via complete protocol consolidation (block, file and object storage) on a single platform.
“Being completely software based, the Hedvig platform can span multiple data centers across multiple physical geographies including disparate cloud environments,” said Avinash Lakshman, Hedvig CEO. “This may be the most comprehensive solution ever unleashed into enterprise data centers and public cloud environments.”
Hedvig was founded in 2012 by Avinash Lakshman, the inventor of Apache Cassandra and one of the inventors of Amazon Dynamo. The proposed acquisition is expected to close in Commvault’s fiscal third quarter, subject to certain closing conditions. The transaction is expected to be slightly dilutive to Commvault’s FY’20 non-GAAP EPS and accretive to FY’21 non-GAAP EPS.
“Hedvig’s technology is in its prime. It has been market tested and proven. We believe that the convergence of storage, multi cloud, and cloud native technologies, combined with our leadership in data management, will accelerate the movement towards modern applications built on containers and microservices. Commvault will set the bar for the unification of storage and data management for the future,” added Mirchandani.