The $13.5 billion merger of Symantec Corp. and Veritas Software Corp. not only creates a dynamic new presence in enterprise software but also could signal a major shift in the way customers buy software and handle their relationships with vendors.
Executives from both companies said the main driver behind the merger is a desire to compete with major vendors to deliver integrated security and availability tools to large enterprises. Once the transaction closes, the new Symantec will have more than 13,000 employees and a broad portfolio of security and data backup products that will position the company alongside rivals such as IBM and Computer Associates International Inc.
"Combined, we can be the ultimate company to deliver the most comprehensive solutions for security and availability. This was a strategic transaction," said Gary Bloom, CEO of Veritas, based in Mountain View, Calif. "I cant think of anything thats more important to CIOs than the security and availability of their data."
John Thompson, CEO of Symantec, will remain as CEO and chairman of the new company, with Bloom taking the titles of president and vice chairman.
Both Bloom and Thompson made clear that they intend to take advantage of efficiencies the merger presents. For enterprises, that will mean one representative selling all the companys products—most likely to the CIO and not the IT staff.
"I think enterprises want one common relationship manager across all of the products," Thompson said. "This is an offensive move. No company in the industry will have the capabilities we have."
Those capabilities include a broad lineup of both software and hardware security products and managed security services on Symantecs side of the house, now complemented by Veritas backup and availability products, which hold a dominant position in the market. Despite a number of key acquisitions over the past two years that have led Veritas more toward utility computing, the storage software company built its reputation on its two primary backup offerings, NetBackup Enterprise Server and Backup Exec.
According to the IDC Worldwide Quarterly Storage Software Tracker report released last week, Veritas held its lead in the backup and archiving software race with a commanding 40.4 percent revenue share in the third quarter, well ahead of CAs 19.1 percent and EMC Corp., which ranked third at 11.8 percent.
Many of the customers that the combined companys reps will be calling on see the acquisition as a positive move, assuming integration of the companies goes smoothly.
"Id rather buy from one company than go shopping for pieces all over the place," said Ariel Silverstone, chief information security officer at Temple University, in Philadelphia, and a Symantec customer. "It lets you do things more efficiently. Because things will be done the same way, reporting could be consolidated. That would lead us closer to the concept of true dashboarding."
It will likely be at least eight months before customers see any integration of the companies products, given the regulatory hurdles for closing the transaction, not to mention the technical challenges. Still, officials from both companies are optimistic about the potential combinations.
"There are some very interesting synergies, even before we engaged our engineering teams," said John Schwarz, president and chief operating officer of Symantec, in an interview with eWEEK. Schwarz cited the combination of Veritas e-mail archiving solution with Symantecs anti-spam technology. "Think of all the space youd save by filtering out all the spam before you archive the e-mail."
The move also gives Symantec, based in Cupertino, Calif., access to the blue-chip enterprises on Veritas customer list, a major asset for Symantec, which has had trouble making headway in the enterprise on its own.
That pipeline into the enterprise could prove vital for Symantec, given that many of its core products, such as anti-virus software and anti-spam tools, are sold to consumers at discounted prices and face stiff price competition, industry observers said.
"Symantec is clearly saying that those things like [anti-virus] will be commodities," said Chuck Boesenberg, CEO of security vendor NetIQ Corp., based in San Jose, Calif., and a former Symantec board member. "People over there are saying they have to be selling higher in the food chain."
Thompson said that transition teams at both companies are already at work putting together a plan for merging Symantec and Veritas.
Additional reporting by Brian Fonseca