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The Symantec/Veritas Combination: A Data Powerhouse

The blockbuster $13.5 billion merger of Symantec and Veritas will create the fourth largest pure software company, focused on both securing data while making it available, according to the chief executives of both companies.

The huge deal, in which Veritas shareholders will receive 1.12 shares of Symantec stock, is scheduled to close in the second quarter of 2005, the companies announced Thursday, making it the largest merger of two pure software companies. The deal comes just three days after Oracle and PeopeSoft agreed to their $10.3 billion merger.

The newly combined company will be called Symantec and John W. Thompson will remain chairman and CEO, while Veritas chairman and CEO Gary Bloom will become vice chairman and president. Both said they share a common view that securing data and making it available is a key requirement among customers that must come together—a requirement that can be at odds with each other in a shifting environment where more people require data, and compliance and regulatory requirements continue to change.

"This dichotomy is driving the obvious convergence between securing the infrastructure and ensuring information availability," Thompson said on an investor conference call announcing the merger. "The combined company will offer customers one of the broadest portfolios of software and solutions on the most complete set of operating platforms, and across all tiers of the infrastructure."

Veritas' Bloom noted on the call, that customers are looking to see security and data availability to be addressed by a common provider. "As our customers have begun to migrate to a utility computing model, the availability and security of information have emerged as a top priority," Bloom said. "Single companies that can secure and make available all of their information represent a unique value proposition."

The impact on the companies respective channel programs and whether or not the percentage of sales through indirect channels would increase, decrease or stay the same, is yet to be determined, said Symantec president John Schwarz, in an interview with VARBusiness. "It's a little early to tell on that question," Schwartz said. "I think the opportunity in the mid-market is greater than anywhere else so we will focus more energy in that area."

Stephen Oles, managing sales director of Philadelphia based Cordicate IT, a Symantec and Vertias VAR, said he was glad to see that Veritas wasn't acquired by a hardware vendor, and believes the combination of the two companies is complementary. "I do view this as a good foundation for building our business. There isn't really any overlap. Veritas has a real tight channel partner program and I think everyone knows who Symantec is. I think both companies may have seen a dead end over the next three to five years, and maybe by joining forces now, each company could take the technologies they each possess and make the product sets better."

Solution providers seemed cautiously pleased with the deal while waiting to see what the new go to market strategy will bring and how the channel programs will shake out.

As an example, Tom Kuni, the president and chief executive officer of Metuchen, N.J.-based SSI HubCity (#418 on the VARBusiness 500) sells both and calls the deal "a natural." Symantec, he observes, is doing the opposite of CA—storage trying to get security expertise.

"This is a business where size matters. I think it's a great move on Symantec's part because I believe Veritas has maybe reached a pinnacle on its growth," Kuni said. He said that partners that sell both become extremely valuable because they have expertise in both vendors' products.

And John Gunn, the chief executive officer of Salina, Kansas-based Integrated Solutions Group, (#398 on the VARBusiness 500) said he is responding "real positively" to the deal.

"Symantec really needed to have this type of solution," he said. "In my opinion, Symantec tries to make resellers more profitable. Veritas doesn't do that. "I just always felt Symantec was more partner friendly that Symantec and I hope there will be some programs in place that will give us some profit." He added that is eager to sell the enterprise suite of products.

Additional reporting by Steven Lang

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