EMC Pulls Switch on Veritas

EMC Corp. (NYSE: EMC)wants to stab Veritas Software Corp. (Nasdaq: VRTS) in the backup.

It's launched an incentive program to tempt backup customers to migrate from its rival's wares, hoping to capitalize on any distraction on Veritas's part during its merger with Symantec Corp. (Nasdaq: SYMC). (See Symantec & Veritas: It's a Deal.)

Calling it a Safe Switch program, EMC is offering licensing discounts and services to help customers change over. EMC officials say the program is specifically aimed at migrating enterprise customers from Veritas NetBackup to EMC Legato NetWorker, and smaller companies from Veritas Backup Exec to its EMC Dantz Retrospect.

Veritas is the backup software leader, but its planned merger with security software giant Symantec has competitors smelling blood (see Vulnerable Veritas).

EMC will announce upgrades for Legato NetWorker and Dantz Retrospect next week, but it began its Veritas migration program two months ago without a public announcement.We’re giving customers the little bit of extra help they need to replace the competition,” says Kelly Polanski, EMC product marketing VP. She says that help comes from “deep discounts on product licenses” for NetBackup and Backup Exec users.

How deep? “For some customers, we’ll give a like-for-like trade-in at no cost,” Polanski says.

Does that mean free software? Not really. Customers will have to pay for maintenance and can buy services to facilitate the migration. But it’s no surprise that EMC is willing to give up licensing fees to take market share from its No. 1 software rival.

Indeed, EMC has already spent billions to challenge Veritas. EMC acquired software companies Legato and Documentum for a combined $3 billion in 2003 and merged them into the EMC Software Group to go after Veritas (see EMC Gobbles Legato, EMC Cops Documentum, and New EMC Group Jabs Veritas). Dantz cost EMC less than $50 million in October, giving it a weapon to attack Veritas on the low end (see EMC Dances With Dantz).

EMC’s Polanski wouldn’t say Smart Switch is timed specifically to take advantage the merger, but it’s unlikely the timing is coincidence.“I’m sure EMC’s not the only one thinking along those lines,” says analyst Arun Taneja of the Taneja Group. “Everybody’s hoping Veritas will lose a beat or two. They want to take advantage of a lack of focus that might occur. The ball is in Veritas’s court now not to let that happen.”

Veritas’s other backup competitors include IBM Corp. (NYSE: IBM), Computer Associates International Inc. (CA) (NYSE: CA), BakBone Software Inc. (Toronto: BKB), and startup CommVault Systems Inc.

Although Veritas executives have spent a lot of time talking up and preparing for the merger, they haven’t ignored their backup product line (see Symantec Execs Give Details). Veritas upgraded Backup Exec last week, adding the ability to back up remote site data from a central console to woo SMBs (see SMBs Praise Centralized Backup).

During Veritas’s earnings call Thursday, CEO Gary Bloom played down the threat of NetWorker. Bloom said he considers IBM Tivoli his main backup competition, followed by Computer Associates.

Veritas reported strong fourth-quarter sales Thursday, but analysts will be watching closely to see how it copes with the merger and swarming rivals (see Veritas: All Systems 'Go').“We believe 2005-2006 will present a bumpy road with the distractions of integrating two large organizations and a tougher environment with increased competition,” Robert W. Baird & Co. Inc. analyst Dan Renouard wrote in a research note today.

Taneja says rivals might be overestimating the potential danger to Veritas. “Veritas and Symantec have no product overlap,” he says. “The product managers are not involved [in the transition], the sales people are not involved, so maybe they’ll make it look seamless.”

At press time, Veritas had not responded to requests for comment on EMC's new program.

— Dave Raffo, Senior Editor, Byte and Switch