CommVault Locks In Dell

CommVault Systems Inc. considered by industry insiders the likeliest candidate to be the next storage software company to go public – today secured an huge OEM deal with Dell Computer Corp. (Nasdaq: DELL) that will make it an even more attractive IPO candidate (see CommVault 'Well Positioned' for IPO).

Dell announced it would sell CommVault's backup and recovery software with its Clariion SAN and PowerVault NAS systems (see CommVault Locks Up Dell Deal). CommVault developed GalaxyExpress – a lower-end version of its Galaxy enterprise application – for Dell. The software provides basic network backup and restore capabilities for networks with up to 25 clients.

The deal gives CommVault the major OEM partner it sought to bulk up its distribution strategy, while also providing Dell with backup and recovery software for its soon-to-be-launched low-end SAN system (see Dell's Storage Numbers Dip and Dell & EMC Prep Low-End SAN).

Dave West, CommVault's VP of business development, says CommVault has turned off some of the higher-end features of its Galaxy product, but customers can restore those features with license keys if they want to upgrade. Pricing for GalaxyExpress begins at $2,495 and is backed by Dell support services.

West says the deal came after 18 months of discussion with Dell. During that span, Dell pulled in more than $10 million of revenue from CommVault software and maintenance through a partnership. It also helps that all of CommVault's software is built with a common code for easier upgrades. Market leader Veritas Software Corp. (Nasdaq: VRTS), for example, has distinct backup products for the low-end and enterprise markets.CommVault now has a pretty impressive list of partners. It has a reseller deal with Hitachi Data Systems (HDS), strategic partnerships with EMC Corp. (NYSE: EMC) and Hewlett-Packard Co. (NYSE: HPQ), and OEM deals to run on storage appliances with Network Engines Inc. and StoneFly Networks Inc.. But Dell is regarded by many as its first top-tier OEM partner.

"This is our broadest and deepest OEM deal," West says. "It means a lot more volume and exposure for CommVault."

The deal also brings CommVault back into the SMB market, where it started with its backup and recovery product, before electing to concentrate on the enterprise space. Analysts and venture capitalists have identified CommVault as a prime IPO candidate for this year or early 2005 at the latest. CommVault says it is adding between 200 and 300 customers a quarter, and the Dell deal should accelerate that rate.

— Dave Raffo, Senior Editor, Byte and Switch