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Experts say Symantec break-up makes sense for storage

Symantec breakup came about because executives realized its storage and security products were sold to a different set of customers, storage experts say.

Symantec's decision to spin off a backup-focused storage vendor is considered a smart move by industry analysts even as it caught customers by surprise.

Symantec last week confirmed that it will separate its security business and its information management arm into separate companies, with the security arm retaining the Symantec brand. The as-yet-unnamed storage company will sell backup, archiving, electronic discovery and storage management products.

The Symantec breakup underscores its struggle to integrate the storage products it gained in 2005 by acquiring storage vendor Veritas for $13.5 billion.

Not all customers predicted Symantec breakup

Although rumors of the split swirled before Symantec made it official, not all Symantec customers saw it coming.

Jacob Ackerman, director of IT for managed hosting provider Horizon Business Services of Naples, Fla., said he was not aware of the spin-off until a day after the announcement. Ackerman, who uses Symantec's Backup Exec data protection software, said he is taking a wait-and-see attitude to the move.

"The really big question is whether the new storage company keeps customer support in the U.S. or bases it out of who knows where," he said. "The worst-case scenario would be if some big hardware vendor buys the storage business just to get the customer base, and then releases a product of its own. That was one of the things we were happy about when Symantec bought Backup Exec from Veritas: They left it alone."

Analyst: Symantec breakup should help company focus

One analyst said the Symantec breakup is a "validation that clearly they weren't able to unite the information management and storage management business with the security management business. What they told us in those areas was they actually tried going in and selling both products to stakeholders, but it turned out to be totally different stakeholders," said Henry Baltazar, a senior analyst at research firm Forrester.

Symantec said the split is expected to be completed by the end of 2015. Breaking the business lines apart should enable Symantec to better focus on the discrete needs on both sides of the house, Baltazar said.

"Symantec needs to be careful how it handles the naming and separation because they have a lot of existing partners that will become competitors," he said. "There are customers who have enterprise license agreements that cover both sides of the house also, so those have to be negotiated. It's one reason why they have such a long leeway to be able to break up the company."

Symantec breakup part of industry trend

Greg Schulz, a senior analyst at consulting firm StorageIO, pointed out that Symantec's breakup is part of a trend in the industry. Hewlett-Packard is breaking out its PC and printer groups from its enterprise products and services, and eBay is spinning out PayPal. A large EMC investor is also pressuring that company to break up by spinning off VMware.

"There is an industry trend of spinouts to maximize shareholder value. In some cases, this is about unlocking value in a company that might be worth more in pieces rather than as a whole, which could very well be the case with Symantec," Schulz said.

Schulz said he thinks Symantec should consider rebranding its storage as Veritas and operate it as a separate business. "There are opportunities for them to do some synergetic acquisitions in adjacent yet complementary space. Likewise, they could be an attractive acquisition given their data protection and management software that enable software-defined storage management."

Jason Buffington, senior analyst at Enterprise Strategy Group, said Symantec has more than 100 products that are managed by different parts of an IT organization. Security and data protection have different product portfolios. The split will allow security and data protection engineers, marketing, direct sales and channel to "operate in a cadence that make sense for both sides.

"They always had the idea of two business planets and lots of little moons bouncing around," he said. "There is some natural segmentation here. Security and data protection have a separate sales motion and separate buyers."

IDC analyst: Symantec breakup part of backup-specific trend

Eric Burgener, an IDC storage research director, said the Symantec breakup is also part of a backup-specific trend. Besides the behemoths breaking up, there have been other smaller spinouts of backup products in the last year. Arcserve broke out of mainframe software vendor CA Technologies to concentrate on the SMB market, and Catalogic split from data integration vendor Syncsort to focus on its data protection software.

Burgener said Symantec also realized it was going after two sets of markets.

"The people managing backup, information management and archiving in IT organizations are not the same people managing security. There is also a huge consumer component to Symantec security. The split will allow them to operate more efficiently."

Sonia Lelii and Dave Raffo contributed to this story.

Next Steps

Looking back at the Symantec-Veritas merger

How rivals responded to the Veritas merger

What one former Symantec CEO said in 2005 about merging with Veritas

Dig Deeper on Backup and recovery software

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After the wave of frenetic Acquisitions during the last two years in IT, now the storage market is extremely competitive, lowering margins, requesting more investments to innovate and organisations more agile in the management to move faster. HP, spinouts to come could be Vmware and Dell. Their portfolio of products has became so huge than everyone is lost, customers and sellers. To me, this is a good strategic move and definitely good news for the shareholders.
Well, no kidding it was a different set of customers. That's what people said when Symantec bought the other companies to begin with, but they figured they could develop a suite that *everyone* could buy. Didn't work out that way.
Trying to combine both into one business model is not a good idea. Their security has always been a business mainstay. They should keep it separate. 
It'd be interesting to see an update to this, actually. Didn't Symantec spin out some pieces of itself last year?
Sharon Fisher: Regarding your last question, please see: