Legato Couples With Big Blue

Legato Systems Inc. (Nasdaq: LGTO) may be on the verge of becoming a unit of EMC Corp. (NYSE: EMC), but that hasnt stopped the company from signing a massive reseller deal with EMC competitor IBM Corp. (NYSE: IBM) (see EMC Gobbles Legato and IBM Uses Legato for Email).

The Mountain View, Calif., company said today that IBM will soon start reselling three of its email management and archival products:

IBM is expected to start reselling the Legato email software at the end of this year as part of its own enterprise email storage and retrieval initiative. The two companies are demonstrating the joint solution, which works with Lotus Notes/Domino and Microsoft Exchange/ Outlook, at this week’s IBM eServer xSeries technical conference in Orlando, Fla.

Legato won’t reveal how much the deal is worth, but George Symons, the company’s CTO, says it is significant. “We think it has tremendous potential,” he says.

The deal, which has been in the works for the past six months, not only promises to line Legato’s pockets with some extra cash, he says, it also helps validate EMC and Legato’s claims that the software vendor will remain an independent, separate software division once the acquisition is complete. “There’s been some skepticism as to whether we would be able to continue to run as an independent software vendor,” he says. “This is a proof point. This is critical.”Symons concedes that IBM had a few qualms itself when the EMC deal was announced in July, but that Legato quickly quieted its fears. “They wanted to understand the structure – how we’d be run,” he says. “IBM is always very careful when they enter into a relationship… But if you think about it, IBM did this with Tivoli, so they understand the model.”

EMC has said it expects to close the Legato acquisition in the fourth quarter of 2003.

IBM didn’t return calls seeking comment by press time.

While the partnership deal may seem strange at first glance, industry analysts say that it makes sense. “It appears that Legato, and certainly EMC, want Legato to continue partnering,” says Enterprise Storage Group Inc. analyst Peter Gerr. “Of course, IBM could potentially be at risk down the road. But one of EMC’s biggest goals is to increase software revenue. Why would EMC want to upend or derail what is a very successful channel for Legato?”

The IBM partnership, along with a string of recent technology-related announcements from Legato, is the company’s way of reassuring customers that it is protecting their investment, even as it is being swallowed by EMC, Gerr says (see Legato Mirrors Oracle and Legato Set to Demo ILM ).“If I'm one of Legato's 30,000-plus customers, I want to be reassured that the investment I've made in Legato to date will be protected, and that the company is committed to expanding support for technologies that are important to me like Windows Storage Server 2003 for my NAS and new solutions for my Oracle databases or for managing and archiving my email,” he says.

In a separate release today, Legato announced the release of its new NetWorker 7.1 software (see Legato Does Snapshots). The new version of the software supports Windows Server 2003, as well as Linux Enterprise Editions of Red Hat and SuSE on IA32 and IA64 architectures. It also includes a new NetWorker PowerSnap module, which manages snapshot backup and recovery across multiple third-party hardware platforms, and integrates the snapshots with applications like Oracle and Exchange. By the end of this year, it will also support SQL and SAP.

While companies generally have access to a number of snapshot technologies already baked into their different hardware platforms, there has, until now, not been a unified way of managing all of those technologies together, according to Arun Taneja, an analyst with the Taneja Group. “Legato is filling in a market gap that exists in the market place,” he says “Every vendor has its own methods for doing snapshots. They have different GUIs, different methodologies… Legato is giving you the same process to manage all of that… It’s a snapshot virtualization product.”

Pricing for NetWorker 7.1 is tiered and starts at $7,995 for 2 Tbytes of storage. For 10 Tbytes, the price is $29,995.

— Eugénie Larson, Senior Editor, Byte and Switch