Grant Fritchey (2/8/2013)
I'm surprised you were getting dedup through the encrypted databases. Really surprised. I figured that would work more like trying to compress them (where the size sometimes goes UP). Any guesses as to why that might be?
My understanding of how the dedupe works in Server2012 is that it is looking for matching "blocks" within files, not "compressing" the files.
So even though the dedupe process can't read the actual data in a TDE (or other encrypted) file, it can "see" the block on disk and check if it matches another block. If they match, it sets up a pointer to one of the blocks for both files and calls it done.
Here we go, the Technet overview The process is reading "chunks" of files and looking for duplicates.
And another Technet Blog posting about it
What's also nice about it, is you can exclude file types from deduplication, so you could have this on your SQL data drive, exclude mdf / ldf / ndf, and go...
Not that I'd try that...
Jason