SOLUTION PROVIDERS SEE THE GOOD AND THE BAD IN RECENT MERGER MANIA

Over the past two years, Hopkinton, Mass.-based EMC and Veritas, Mountain View, Calif., especially seemed locked in a fight to outdo each other with their sheer number of acquisitions. EMC, for instance, used acquisitions to move into content management, server virtualization, and midrange and entry-level storage software. Veritas branched off into server and application performance and other utility computing technologies.

But while Symantec's acquisition of Veritas halted the latter's buying spree, solution providers this year can expect to see even more drama as storage vendors move into e-mail archiving and content management, or grab small companies for their unique technologies. "It is exciting," said Dave Cerniglia, president of Consiliant Technologies, an Irvine, Calif., solution provider. "Smaller guys come up with new technology. They see a need and develop a new idea."

Carolyn DiCenzo, chief analyst for storage software at research firm Gartner, said she expects Oracle, Redwood Shores, Calif., or Hewlett-Packard, Palo Alto, Calif., to make a play in the storage software space by acquiring an e-mail archiving vendor such as Zantaz or iLumin Software Services.

DiCenzo also rates FileNet, which delivers enterprise content management software, as tops on the acquisition list. "All these vendors could feed [HP's and Oracle's] information life-cycle management plans," she said.

In fact, DiCenzo sees a number of potential targets in the MandA hit parade—ranging from smaller ISVs CreekPath Systems and AppIQ to larger players such as Computer Associates International, BMC Software and Quest Software.

"If you can see HP and Compaq merging, you can see anything," she said. DiCenzo added that tiny, relatively unknown companies will continue to be picked up by bigger fish for their technology.

It's the prospect of bringing smaller vendors' emerging technologies to market that gladdens the hearts of solution providers. For one thing, it's easier to present those technologies to customers. "It's tough to evangelize smaller companies," Cerniglia said. Dan Carson, vice president of marketing and business development at Open Systems Solutions, Yardley, Pa., agreed. "Some companies with good products are underfunded," he said. "They need the umbrella of a larger company."

But Carson isn't as enthusiastic about larger companies merging. "It makes me nervous," he said. "Like Symantec and Veritas—there's definitely a difference in culture between the two. Symantec, while it has Fortune 1000 accounts, is still very much consumer-oriented, so there are questions about the [merged] company's channel direction." Mark Teter, CTO of solution provider Advanced Systems Group, Denver, said mergers of larger players often disrupt established relationships. "We know how to work with Veritas. But now we have to learn how to work with Symantec. With Veritas, I know the management and the sales team," he said.

Of course, such uncertainty is the natural byproduct of big fish being gobbled up by whales. That's why Cerniglia counsels resilience. "The nature of the beast is change," he said. "Sometimes it's easier to work with larger companies and learn their product sets. I also prefer to work with fewer suppliers."