FRAMINGHAM (02/15/2000) - Given their collective clout in the enterprise software arena, will the CA/Sterling marriage raise antitrust concerns?
Industry observers don't think so.
For example, Computer Associates International Inc.'s storage software is targeted at tape and optical media-based systems for Windows NT and Unix environments, while Sterling Software Inc.'s tape storage SAMS products run on IBM's OS/390 platform.
CA's ASM2 automated disk storage management system does "compete head-to-head" with Sterling's SAMS:Disk system, said Colin Rankine, an analyst at Giga information Group Inc. in Dallas. But with IBM corralling 80% of that market, antitrust concerns appear to be moot, he said.
IBM, Legato Inc. and Veritas Corp. are serious competitors in the storage software arena, Rankine said. For example, Veritas racked up revenue of $226 million for the last quarter of 1999. Meanwhile, Sterling's storage division pulled in just $70 million for the same period, said Sterling CEO Sterling Williams.
Instead, expect the U.S. Department of Justice to look more closely at software that handles data transport between mainframe, Unix and PC systems, Rankine said.
"Say, if you're a bank, and you need to transfer funds, parties at both ends of the transaction need the same software, so one software tends to dominate in any industry," he said.
CA-XCOM is the leader in the retail industry, while Sterling's Connect:Direct dominates in the banking, finance and telecommunications sectors. Together, the two companies have 95% of the distributed data-transport market, Rankine said.
Some product overlap also exists with SNA systems management software, Rankine pointed out. Sterling markets the Solve:Netmaster suite, while CA offers the Netman configuration manager and Netspy performance manager. Meanwhile, IBM subsidiary Tivoli Software Inc. sells a comparable systems management package called Netview.
But the merger would "just mean it would be a two-man field instead of a three-man field," said Paul Mason, an analyst at International Data Corp. in Framingham, Mass.
Sterling has an IBM VM and VSE services practice in Washington, "and they're pretty much the only game in town for VM," Mason said. But transferring that operation to CA would not change the one-horse race, just the jockey, he added.