EMC Chews & Swallows BMC Unit

EMC Corp. (NYSE: EMC) announced today that it has acquired the rights to BMC Software Inc.s (NYSE: BMC) Patrol Storage Manager (see EMC Eats Up BMC Leftovers).

The companies didn’t disclose any financial details, but EMC revealed that it plans to discontinue BMC’s software product and migrate the existing customers to its ControlCenter products. Ten BMC employees involved in supporting the software will move over to EMC to help ease the migration process.

The deal also calls for BMC to begin reselling EMC’s ControlCenter products through its MarketZone program and calls for tighter integration of the two companies’ existing technologies and future projects.

The deal was widely anticipated. Ever since BMC announced that it was pulling the plug on its Patrol Storage Management line back in February, firing dozens of employees in the process, there’s been plenty of speculation over who would take over (see BMC Folds Storage Unit). Back in May, Byte and Switch reported that EMC was the most likely candidate (see Will EMC Salvage BMC Unit?).

“I think it’s good for both companies,” says The Enterprise Storage Group Inc. analyst Peter Gerr. “BMC didn’t want to abandon their installed base… and this opens up the possibility of selling more EMC software to more BMC customers.”Both companies insist that the unmentioned amount of money changing hands is not a material issue for either of them. Instead, they say, the vendors entered the deal to gain access to new customer bases and achieve a tighter partnership. EMC, which has actively been trying to expand its open storage management software market share for the past year and a half, will, for instance, not only take over the approximately 50 customers currently using Patrol Storage Manager, but will also have access to the more than 5,000 customers using BMC’s other Patrol products (see Will EMC Salvage BMC Unit? EMC Sucks Up Astrum, and EMC to Acquire Prisa, Finally).

EMC’s senior vice president of open software operations, Bill Nelson, insists that the migration of Patrol Storage Manager customers to ControlCenter should be relatively painless and won’t cost customers a penny, since they won’t be asked to pay any additional software licensing fees. “On these 50 plus accounts, we’ll develop 50 migration plans,” he says. “They’ll all be unique.”

For Patrol customers, the deal is in fact a relief, says Doug Pushard, BMC’s vice president of corporate development, pointing out that it brings to an end months of speculation over what would happen to the product line. “We have talked to a majority of the customers over the past couple of days,” he says. “The majority are not just happy, but extremely happy.”

Of course, the deal is about more than moving customers from one software platform to another. Going for tighter integration of their technologies, the companies say they hope to leverage EMC’s clout in the storage market with BMC’s server and application-level expertise to get an edge over the competition.

“There’s a potential for these two companies to develop a total management solution that could be very competitive with HP and IBM,” Gerr says.Hewlett-Packard Co. (NYSE: HPQ), which says it also evaluated purchasing the BMC assets, isn’t worried. “I think this is going to prove insignificant,” says Don Langeberg, HP’s director of storage software marketing. “Rather than working on new functionalities, they’re going to be integrating existing products… I feel that we have a significant product lead on them.”

While it may sound as if EMC and BMC are getting cozy enough to start mentioning the M-word (again) both companies deny such rumors (see EMC Eyes BMC). “There aren’t any discussions of mergers,” Nelson asserts. “That’s not on the horizon.”

Following the news, EMC saw its stock jump 3.2 percent to $10.90 a share; BMC saw its stock climb 2.5 percent to $16.36 a share.

— Eugénie Larson, Reporter, Byte and Switch