Veritas Jumps Up, Down & Sideways

Veritas Software Corp. (Nasdaq: VRTS) customers dont seem fazed by the storage software vendor’s pending acquisition by Symantec Corp. (Nasdaq: SYMC).

Although competitors stepped up efforts to pilfer customers during the transition, Veritas actually increased its storage market share last quarter, according to IDC figures (see IDC Says Storage Software Up).

Veritas’s overall storage software market share ticked up to 21.4 percent from 20.5 percent in the fourth quarter last year, and its bread-and-butter backup share increased to 41.6 percent from 39.8 percent, according to IDC (see Veritas Tops in Backup, File System SW).

EMC Corp. (NYSE: EMC) remains first in overall storage software, but still trails Veritas by a wide margin in backup despite making up ground since acquiring backup companies Legato and Dantz over the past 20 months (see Veritas Tops in Backup, File System SW, EMC Swings Into Software Big Leagues, and EMC Dances With Dantz).

EMC and others speculated that Veritas would be vulnerable in the months after Symantec disclosed it was willing to plunk down $13.5 billion on it last December (see Vulnerable Veritas and Symantec & Veritas: It's a Deal). So EMC launched a migration program earlier this year to get customers to switch from Veritas NetBackup to EMC Legato NetWorker and from Veritas Backup Exec to EMC Dantz Retrospect (see EMC Pulls Switch on Veritas).EMC did gain in backup -- but more at the expense of others besides Veritas. EMC increased backup revenue 2.4 percent from the previous quarter, while the entire backup market decreased 4.4 percent sequentially during a typical "down" quarter.

Still, EMC's gain took place against Veritas's loss. EMC went from 12.6 percent share in the previous quarter to 13.5 percent in the first quarter of 2005. EMC increased revenue from $92 million to $94 million, while Veritas slipped from $290 million to $289 million.

While Veritas revenues slipped, losses by other backup companies actually made its share rise. The biggest backup losers were IBM Corp. (NYSE: IBM) and Computer Associates International Inc. (CA) (NYSE: CA). IBM's market share dropped from 15.2 percent to 13.4 percent, slipping from third to second behind EMC. CA fell from 9.9 percent to 8.9 percent.

While Symantec hopes to close the Veritas deal July 2, EMC's keeping up the pressure. “We’re just warming up!” says EMC software marketing VP Kelly Polanski. Besides licensing discounts under its Safe Switch program, EMC added two-day migration services designed to make the process less disruptive.

EMC claimed as of May it had 159 competitive replacements through Safe Switch, including 118 from Veritas.Jeremy Burton, VP of Veritas’s data management group, denies feeling any heat from EMC. Burton says he still considers IBM’s Tivoli Storage Manager the main backup competition. “Legato was a bad product when EMC bought it, and it’s still bad,” he says.

EMC isn't the only rival with a program geared primarily to sway Veritas customers. Startup CommVault Systems Inc. also has a migration program called Smart Switch. Unlike EMC’s program, it does not include deep discounts, but it does go after Veritas. “We’re not going that far,” CommVault marketing VP Larry Cormier says of license discounts. “We just want to be one of the vendors they’re looking at. Our issues have more to do with their [Veritas’s] product than the company's transition.”

All CommVault gives away to customers who switch are t-shirts and Starbucks coffee cards, but it does offer professional services for migration and training to bring customers rapidly up to speed. CommVault claimed 250 new customers last quarter. Because it is a private company, CommVault is not included in IDC’s figures.

Burton says he notices CommVault picking up customers, but he’s not worried. “You won’t see huge market shifts on incremental technology. What’s their disruptive technology?”

— Dave Raffo, Senior Editor, Byte and Switch0