Symantec Expands Beyond Security Via Veritas Purchase

But some users and analysts see product integration as a hurdle

Symantec Corp.'s planned acquisition of Veritas Software Corp. gives the IT security vendor an opportunity to significantly expand its presence in the market for enterprise software, users and analysts said last week.

But, some of them added, the move to absorb Veritas creates technology integration challenges for Symantec and is being driven partly by increased competition for security-related business from heavyweight vendors such as Microsoft Corp. and Cisco Systems Inc.

Symantec claimed that the merger will make it the fourth-largest independent software vendor worldwide, with projected annual revenue of about $5 billion and a product portfolio that combines its antivirus, firewall and intrusion-detection offerings with Veritas' data backup and archiving tools, as well as software for managing servers and application performance.

With the acquisition, "it's time to stop thinking of Symantec as a security vendor and [view it] more as the Wal-Mart of the cyber industry," said Dave Jordan, chief information security officer for the Arlington County government in Virginia. "They're flush with cash, they have top-of-the-line products, and they are at the top of their game."

The county currently uses storage hardware and software from EMC Corp. But Jordan said the addition of Veritas may enable Symantec to bundle storage software with its security tools at a more competitive price than what EMC charges.

However, Symantec's challenge will be to find a way to bring together all of its products under a common management interface and architecture, said Lloyd Hession, chief security officer at Radianz, a New York-based company that provides network services to financial services firms.

"Symantec hasn't effectively integrated the portfolio of security products it already has," Hession said. "Adding the Veritas products won't address this problem and arguably will make it worse."

Dong Jin Kim, a senior Unix systems administrator at Eastman Kodak Co. in Rochester, N.Y., uses Veritas' NetBackup software. Kim said that although he thinks Symantec is a good software vendor, he isn't convinced that it knows a lot about storage.

"Whether they can handle Veritas well is what concerns me," Kim said, adding that he would be more comfortable if Veritas was being bought by a storage hardware vendor.

Symantec CEO John Thompson said during a teleconference on Thursday that the Cupertino, Calif.-based company plans to release a product integration road map after the deal is completed in next year's second quarter. "We have an enormous opportunity to leverage each other's technology strengths," he said. "There's no overlap in strategic product lines or R&D."

'Mixed' Merger Record

But Gartner Inc. analyst John Pescatore said Symantec has "a very mixed record" on integrating previous acquisitions into a cohesive product line.

For instance, its purchases of Axent Technologies Inc. in 2000 and RipTech Inc. two years ago haven't panned out, according to Pescatore. "If I was a Symantec customer, I would be looking at those acquisitions," he said.

Steve Hunt, an analyst at Forrester Research Inc., said the move to acquire Mountain View, Calif.-based Veritas is consistent with Symantec's new information integrity strategy, which focuses on software that can give IT managers a more holistic view of the operational and security risks that their systems face . "Symantec is reinventing itself as an enterprise risk management company," Hunt said.

The company needs to grow in other areas because of increased competition in the IT security market, said Pete Lindstrom, an analyst at Spire Security LLC in Malvern, Pa.

For instance, Microsoft is working to integrate antivirus functionality into Windows. And just last week, it announced the acquisition of Giant Company Software Inc., a vendor of antispyware tools.

In addition, Cisco and other networking vendors are building expanded security functions into their routers and switches, which are expected to further dilute the demand for stand-alone security software.

The merger of Symantec and Veritas is "an acknowledgment that there's just too much ambiguity in the security space to grow a huge company," Lindstrom said. "You need something a little more solid and foundational. Backup software is recession-proof."

Reporter Lucas Mearian contributed to this story.


Symantec: $1.87 billion in revenue; 6,000 employees

Veritas: $1.75 billion in revenue; 6,700 employees


John Thompson will continue to serve as Symantec’s chairman and CEO.

Gary Bloom, the top executive at Veritas, will be vice chairman and president of the merged company.


Symantec expects revenue of about $5 billion in fiscal 2006, which starts in April.

About 75% of the combined company’s business is expected to come from corporate users.

Copyright © 2004 IDG Communications, Inc.

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