Channel Chimes In On Symantec-Veritas Deal

The New York Times reported Tuesday that Symantec was purchasing the storage provider in a $13 billion deal expected to be announced sometime this week. The acquisition would create a massive competitor in the software industry that would be a one-stop shop for products that fight a wide range of threats to PCs and corporate networks.

"This is one of the most incredible things I've seen in five years of specializing in the sales of network security solutions," said Steve Palange, president of TLIC Worldwide, a Symantec partner in Wakefield, R.I. "If my customers can now get Norton, [intrusion-prevention software] and Veritas backup, I think a lot of companies are going to think twice about not signing onto the single-source solutions wagon."

Palange went on to say that with a Veritas-enhanced arsenal of utilities, Symantec could conceivably challenge vendors such as Computer Associates International for serious market share in the storage and network management niches.

Bill Rutledge, software business development manager at CompuCom Systems, Dallas, said the proposed acquisition delivers perfectly on Symantec's multifaceted initiative to mix security and storage into what the vendor dubbed "information integrity."

"We can make information secure, but if it's not available at all times, then what good is it?" asked Rutledge, whose company currently sells products from both Symantec and Veritas. "To think that one vendor could integrate security, availability, disaster recovery and storage--that would change the face of the industry as we know it."

Other solution providers agreed. Amy Rao, CEO of Integrated Archive Systems (IAS), a Palo Alto, Calif.-based storage solution provider, said there's a sizable market for better integrating security into other software products, and such an acquisition would push it along. "We'd love it," she said.

Rao, who was just finishing her Christmas card to Symantec Chairman and CEO John Thompson when contacted by CRN, said the move would bring nothing but benefits to Veritas and its channel if for no other reason than it would align the group under the Thompson's leadership.

"John Thompson is one of the finest CEOs ever," Rao said. "He would do a tremendous job at nurturing Veritas."

Not everyone in the channel is as enthusiastic about the merger, however.

Nick LaForgia, director of L4 Networks, a network and security VAR in Arlington, Va., said that the clash between Symantec's consumer product lineage and Veritas' hard-core enterprise heritage leaves many questions as to how such a merger could turn out. "It can't be good," LaForgia said. "Symantec has more of a history in the consumer-driven market and is adding some business products, but Veritas has always been deep in the enterprise infrastructure. There are two different cultures we're talking about. If you said to me Veritas was purchasing Symantec, that would be different, [but as reported] I would really question this."

Rao said, however, that Veritas would give Symantec the means to tackle enterprise data centers. "Symantec will get a stronger push into the enterprise," she said. "They've been trying to creep in there. Veritas is strong in the enterprise."

The difference in cultures and sales organizations could be a stumbling block, other solution providers said.

"From our experience, they have been calling on different segments of customers," said Dave Condensa, president and CEO of Encino, Calif.-based Helio Solutions. "The Veritas guys are calling on IT organizations, database guys, etc. Symantec tends to sell to different groups . . . under the CSO, the chief security officer. The challenge is trying to take one rep and tell him you are going to call on both organizations."

Veritas is the de facto storage leader, and Symantec is the security leader, said Hope Hayes, president of Alliance Technology Group, a Hanover, Md.-based solution provider. "I'm not sure how they fit," she said.

Corporate employees who purchase security are not often purchasing storage, except in small firms, said Hayes. "If a customer has a Unix group and a Windows group, the Unix group is focusing on backups, and the Windows group on security. [The Windows people] do backups, too. But in an enterprise, if you do a backup, you do it on a large scale. The backups of Exchange databases is huge. But if you are pushing out security, it's mainly on the Windows part."

Spokespeople for Veritas, Mountain View, Calif., and Symantec, Cupertino, Calif., declined to speculate on whether such a deal would be finalized but said negotiations have gone on for more than a month and they are almost complete.

At least one solution provider said he was approached a month ago by Veritas and Symantec to discuss how a possible acquisition might affect the channel.

Symantec is not necessarily the only company looking hungrily at Veritas. Shebly Seyrafi, a director at Merrill Lynch, wrote in an analysis Tuesday that other suitors include Oracle, EMC, Hitachi, Microsoft and IBM.

In the analysis, Seyrafi said EMC is running out of attractive storage software vendors to buy, and that Veritas would help EMC reach its goal of getting 30 percent of revenue from software.

Oracle's interest might come from a push to be what Oracle CEO Larry Ellison calls "the primary consolidator in the software industry," wrote Seyrafi. Hitachi, which has a strong software platform but not much software to back it up, would also be a good fit, he added, though Microsoft, which is working on its own data protection software, would be turned off by Veritas' Unix focus.

Other analysts said the deal was pretty much a foregone conclusion, and that it was a brilliant move for Symantec to expand its role in the network management space overall.

Mike Masnick, CEO of Techdirt, a corporate intelligence and analysis firm in Belmont, Calif., said that because Symantec is in the utility business, the deal enables the vendor to stay ahead of things being built directly into operating systems.

"Veritas gives them a recognized name in the data backup space, specifically within corporate customers that Symantec knows are valuable," he said.

Out of all the possible acquirers of Veritas, Symantec seems to be the best fit, said Rich Baldwin, president and CEO of Nth Generation, a San Diego-based solution provider.

IBM with Tivoli, Hewlett-Packard with DataProtector and EMC with Legato all already have backup solutions, said Baldwin. "What if you say to existing customers, 'Dump what you have?' " he said.

For Oracle to acquire Veritas, it would require a huge change in direction, Baldwin said. "What are they going to be?" he asked. "Another Computer Associates?"

Instead, said Baldwin, the best fit would be either Hitachi, with its strong storage hardware business, or Symantec due to a big push in the industry to consider the security of data storage. "[Security is] an area I'm looking to add next year," he said. "As storage becomes more important, it needs to be secure."

Even solution providers who don't work with Symantec or Veritas had an opinion on the news.

Ray Pompon, network security consultant at Conjungi, Seattle, said that at a time when federal regulations require companies to store and secure information, an acquisition of this nature just makes sense.

"It would be a natural fit to have the same agent doing virus scanning to be backing up and maybe even enforcing corporate data management," he said. "[Sarbanes-Oxley] changes everything."

DAN NEEL contributed to this story.