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While EMC fights calls to spin off VMware with the mantra "better together," Symantec and Hewlett-Packard believe it's smart to break apart.
Symantec yesterday followed HP's lead in breaking up its businesses. HP 's dissolution received applause from customers, and so should the Symantec breakup. Symantec's $13.5 billion 2005 acquisition of Veritas brought together Symantec's security with Veritas storage software, but the merger appears to have hurt both sides of the house.
Now the security business will remain under Symantec's banner. A new information management company will be formed with the storage assets by the end of 2015. That company -- not yet named -- will sell backup and recovery, archiving, e-discovery, storage management, and information availability products.
"As the security and storage industries continue to change at an accelerating pace, Symantec's security and IM businesses each face unique market opportunities and challenges," Symantec CEO Michael Brown said. "It has become clear that winning in both security and information management requires distinct strategies."
He's correct about that. Why did it take Symantec nine years to figure that out? You can't blame Brown. He's only one month into the job, and the Symantec breakup is his first major move as CEO. He is the fourth Symantec CEO since the Veritas acquisition, and none of the others could make the two fit seamlessly.
The original plan was to combine security and data protection to enhance both, and develop unique products that standalone security and storage companies could not offer. But Symantec never integrated the product teams, and its leadership never fully understood the storage business.
Veritas had strong enterprise and SMB backup products in NetBackup and BackupExec, it was the leading third-party storage resource management vendor, and it moved into position to dominate archiving after buying KVS.
Since the acquisition, Symantec made a mess of BackupExec, its SRM business withered away, and it failed to take advantage of emerging cloud and archiving markets. NetBackup enterprise backup has continued to lead its market -- despite an initial struggle to back up virtual machines -- with a successful strategy of selling the software on integrated appliances. The appliance strategy comes at a cost, though. Symantec now competes with the backup hardware vendors it once counted as partners.
While Symantec remains a market leader in backup, it is not the thought leader that Veritas was in storage. Veritas worked tightly with every major storage vendor except for EMC, which pushed its own backup and storage management software. The old Veritas stumbled at times -- it was slow to embrace data deduplication and continuous data protection disk backup technologies -- but had the resources and will to catch up.
Backup Exec 2012 took years to fix
Symantec is still digging its way out of its Backup Exec 2012 hole, created because of drastic changes made to the SMB application that took longtime customers by surprise. Poor reaction to those changes was compounded by Symantec's tardy application support for new Microsoft Windows and VMware releases. Symantec finally added app support and restored popular features in Backup Exec 2014 this year, but only after two years of stalled sales because customers were reluctant to upgrade to BE 2012.
Symantec's first big move into cloud backup also fizzled when it discontinued BackupExec.cloud this year because it lacked support for file sharing and mobile devices.
There are no guarantees that the new information management company that emerges from the Symantec breakup will do better. It will be a different company than the old Veritas, whose top executives have all moved on. The information management company general manager John Gannon has storage experience from working at backup vendor Quantum, but left his COO post there nine years ago.
At least the storage part of Symantec will remain whole. For years, there were rumors that Symantec would sell off pieces of the backup and storage business. Industry sources say several years back it explored selling the NetBackup business to an enterprise vendor such as Oracle and the BackupExec business to Microsoft or another company more focused on SMBs. That's when the NetBackup and BackupExec teams worked independently. They've since merged after the BackupExec 2012 fiasco.
Storage sales sluggish under security firm's banner
Symantec reported that NetBackup revenue increased 35% year over year in the second quarter of 2014. Still, overall storage sales have barely grown. Storage revenue ticked up 1.5% annually over the last five years, from $2.3 billion to a projected $2.5 billion this year. Security revenue of $4.6 million this year almost doubles the storage revenue.
As part of Symantec, the storage executives have often felt like intruders in a security company.
"It was tough for a storage guy sitting inside a security company," said one former high-ranking storage executive who left to join another storage vendor. "We were struggling for mind share at Symantec. Before [annual user conference] Symantec Vision, I had to sneak in little notes to [the CEO] and say 'Make sure you mention data protection in your keynote.' He would say OK, but it barely came up."
At least his successors in the wake of the Symantec breakup won't have to fight so hard in the new company to get storage on the agenda.
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