Veritas looks to diversify

Veritas Software Corp., the second-largest vendor of storage management software, is planning to expand into other IT management technologies so it can better compete against more diversified rivals such as EMC Corp., Computer Associates International Inc. and IBM Corp.

Veritas officials this month said a series of recent acquisitions is part of a strategy to offer IT administrators a utility model that offers a bundled suite of products that can manage across storage, servers and applications. The Mountain View, Calif.-based company's goal is to increase its annual revenue from US$1.5 billion to US$5 billion over the next three years, they said.

To some Veritas users, the plan makes a lot of sense. For example, Tom Guthrie, vice president of technology operations at Atlanta-based Cox Communications Inc., said there's definite value in the direction Veritas is taking.

"In general, with all of our vendors, we've encouraged them to go up the value chain in areas they're good at, and we're happy to interact with them about that," Guthrie said. He recently standardized data backup operations on Cox's 10TB storage-area network (SAN) by installing Veritas' flagship NetBackup software.

Bill Augustadt, chief technology officer at BlueStar Solutions Inc., an application outsourcing services firm in Cupertino, Calif., said the ability to pool server capacity to address application needs and monitor those applications on the fly will allow the company to more efficiently control services according to customer needs.

"Any automation we can do will allow us to scale across platforms with fewer people to manage them," said Augustadt, who uses various Veritas products in conjunction with data backups for more than 600 servers on a 160TB SAN.

Veritas has announced three acquisitions since November, adding products in areas such as server provisioning and application performance management. The deals put the company into markets beyond storage management and server clustering for the first time.

Veritas' big task this year is to "consolidate and integrate the companies we acquired," said Jeremy Burton, the company's chief marketing officer. "But I don't think it will be technology that hinders us. It will be execution [issues] if we can't do it."

Anders Lofgren, an analyst at Giga Information Group Inc. in Cambridge, Mass., said Veritas' expansion plan is a natural evolution, and he predicted that other storage software vendors will follow suit.

"In the end, what you really want to be able to do is tie everything back to the application," Lofgren said. But, he said, "for Veritas to build credibility outside of the storage management space, that will take some time."

In 2001, Veritas was second in storage management sales, with 17.4% of the marketplace, trailing only EMC, which had 28.3%. CA had 8.6%, IBM had 7.7%, and Legato Systems Inc. in Palo Alto, Calif., had 3.5%, according to IDC in Framingham, Mass. More recent figures weren't immediately available.

Veritas last month reported a fourth-quarter net loss of US49 million on revenue of US405 million. But the company said business was better than expected, and it reported a US57 million profit for the year as a whole, compared with a net loss of US643 million in 2001.

"Over the next year or two, there's going to be a lot of consolidations taking place in the software market," Burton said. "We feel there's going to be a land grab. And because we don't sell hardware, we feel we have the upper hand."

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