Symantec's acquisition of Veritas has the potential to benefit customers and shareholders of both companies, but details of the deal leave some important questions unanswered, according to executives and industry experts.
The acquisition will transform Symantec into an enterprise software powerhouse.
However, it also leaves issues unsettled, including the question of how the companies' products will be integrated, and the long-term roles of Veritas chief executive Gary Bloom and Symantec president and chief operating officer John Schwarz, who will initially share the presidency of the combined company.
Veritas sells backup, archiving and file system software. Symantec sells software to protect home and office computer systems and networks. The deal is expected to be completed in the second quarter of 2005.
Symantec and Veritas executives hope the combined company will help its enterprise customers to control data integrity and availability, according to Jeremy Burton, executive vice-president of the Data Management Group at Veritas.
"The two biggest risks that (chief information officers) face is people breaking into their systems, or those systems failing. If we can solve those problems, we're going to take a lot of worry off the CIO's plate," he said.
New US state and federal data privacy regulations demand strict information integrity. At the same time, the move by many companies to highly available Web-based services demands strong IT infrastructures.
The new company will focus on both those needs, integrating storage management and security management technologies and services for companies that want resilient, highly available data storage systems that are also secure, said Symantec's Schwarz.
The acquisition is in line with Symantec's decision to emphasise data integrity in recent months, said Chris Christiansen of IDC. It also gives Symantec a much larger stake in the enterprise software market, which will serve the company well as Microsoft moves to integrate more security technology with its Windows operating system.
"Microsoft clearly has to do something to improve the security posture of its software, and that has a potentially harmful effect on antivirus suppliers and other client security products," he said.
However, Symantec's purchase of Veritas raises at least as many questions as it answers.
The companies have only begun to contemplate connections between their product portfolios and will not begin significant planning until after the acquisition has closed in mid-2005, with no real product integration before 2006, Schwarz said.
The Veritas purchase throws a shadow of doubt over other recent Symantec acquisitions, including the 2003 purchases of storage management software supplier PowerQuest and ON Technology, Christiansen said.
Symantec must also work to keep its consumer security software business healthy and add new technology that keeps it ahead of Microsoft, as that company gradually incorporates more security products into its offerings, Christiansen said.
Also unclear are the rolls of Schwarz, and Veritas chief executive Gary Bloom.
A statement from the companies said that Symantec chief executive John Thompson would continue as head of the new company, and named Bloom as the company president.
However, Schwarz and Bloom are actually slated to share the presidency, with the chief operating officer position likely discontinued once the deal is finalised.
Schwarz expressed confidence that he and Bloom would be able to work together and that the company could operate without a chief operating officer. Bloom will handle the company's "go to market" strategy, with Schwarz overseeing the product portfolio.
Paul Roberts writes for IDG News Service