Veritas, Legato Push And Shove: Business As Usual

Veritas used EMC's acquisition of Legato to position its own hardware-independent storage and utility computing focus as an asset.

"No single hardware vendor likes our approach," said Gary Bloom, Veritas' chairman, president and CEO. "Their software is for their hardware. Our strategy is to leverage customers' existing infrastructures. A hardware company can't talk utility without talking hardware unless it wants to take a risk with Wall Street."

But being tied to a hardware vendor like EMC has actually had a positive effect on Legato's business, said Legato CTO George Symons. The company grabbed 38 deals worth $250,000 or more in the fourth quarter, up from 21 such deals in the previous quarter. There were 96 such deals for the entire year, he said.

While Symons attributed part of Legato's new momentum to superior functionality, service, support and price, he said a bigger part was played by the company's new viability thanks to EMC. "Veritas has always competed with Legato using FUD [fear, uncertainty, and doubt]," he said. "But that issue went away with EMC's acquisition."

Veritas executives, on the other hand, claim that they signed 12 deals worth $1 million or more last quarter and migrated 200 Legato customers to the Veritas platform.

The end result, said Bloom, is that Veritas actually saw a positive effect from EMC's acquisition of Legato. "We're not seeing more of Legato," he said. "We're not seeing them affect our business. They're not winning on a price-alone basis either."

Both companies had their best year ever last year in terms of revenue. Veritas on Wednesday reported revenue for 2003 of $1.8 billion, up 18 percent over 2002, while EMC last week said Legato's revenue hit $318 million, up 21 percent.

Ed Gillis, Veritas' CFO, said the company's fourth-quarter data protection revenue, which comes from such products as NetBackup, Backup Express and related applications, hit $182 million, up 13 percent from the same period a year ago. Storage management revenue from applications such as Volume Manager and File System for the quarter were $71 million, up 12 percent. And utility computing revenue from its clustering applications and from several of its recent acquisitions hit $56 million, up 30 percent.

About 48 percent of Veritas' revenue in the fourth quarter came from Unix and Linux installations, 41 percent from Windows installations and 11 percent from multiplatform installations, Gillis said.

About 57 percent of revenue came from end-user and solution provider sales to the enterprise, 32 percent from volume business through two-tier distribution and 11 percent from OEMs, he said.

Like Veritas, Legato enjoyed revenue growth across the board in 2003. The company's data protection products grew the most in terms of raw dollars, followed by its messaging products and its content management products, said Symons.

Overall, about 66 percent of the company business came from non-OEM indirect sales channels, said Symons. Just a bit less than two-thirds of data protection revenue came from channels, while solution providers accounted for nearly 100 percent of Legato's content management business.