$59 Million Acquisition Propels Veritas Further Into Utility Computing

Veritas Software Corp. on Wednesday said it has agreed to acquire Ejasent Inc. for $59 million in cash, a move expected to boost the storage software company's utility computing strategy.Through the acquisition, expected to be completed by the end of the month, Veritas gets Ejasent's core application virtualization software, called UpScale, and its usage-based metering and billing software, called MicroMeasure. Both companies are based in Mountain View, Calif.

Utility computing, or on-demand computing, is a new industry trend in which system vendors sell services, such as processing power, storage and software, on a per-usage basis. The attraction for customers is the option to pay for computing services in a fashion similar to electricity or other utilities.

Ejasent, founded in 1999, is the third utility-computing-related company bought by Veritas. Jareva and Precise Software were acquired last year for a combined $599 million in stock and cash.

The acquisition appears to be in direct response to rival EMC Corp.'s recent acquisition of server virtualization provider VMware, David Freund, analyst for market researcher Illuminata Inc., said.

In addition, the purchase is another example of Veritas's shift from a company with a storage-centric view of IT infrastructure to one with a more application-centric view."That view does comport well with the way senior IT people look at their infrastructure," Freund said. "At the end of the day, you're running applications. The rest of the stuff is solely there to support running applications. I run my business on applications."

Ejasent's UpScale can automatically move an application from one server to another without disrupting the tasks its performing. The software does this by taking a snapshot of the application and then moving it in near real time.

This capability is useful to meet spikes in processing needs, such as heavy usage of a retail site during the holiday season, or to migrate an application to another server to perform hardware maintenance on the original machine.

Veritas will incorporate MicroMeasure into its application service level management product, CommandCentral Service. The Ejasent product makes it possible for corporations to measure the usage of computing resources for billing purposes.

Ejasent's 21 engineers will join Veritas's High Availability/Clustering group.Veritas plans to start selling both products in the second quarter of this year. UpScale will be available first on Solaris, with a Linux version scheduled for release in early 2005. MicroMeasure runs on Solaris, Windows, Linux and HP-UX.

In adopting utility computing, Veritas joins industry heavyweights IBM and Hewlett-Packard Co.

Other companies that have pursued an acquisition strategy to help build out their utility-computing strategies are Sun Microsystems Inc., which bought CenterRun, Pirus Networks and TerraSpring; and IBM, which acquired ThinkDynamics. All four acquisitions occurred last year.

Nevertheless, utility computing remains a fuzzy term for most potential business customers, since computing is not quite the same as power usage.

"Unfortunately, when a given vendor goes and talks about creating a utility, it really comes down to what assets do they have in house that they can pull together and say, 'This is the model and this is what we believe utility computing is,'" Freund said.Veritas, which reported $1.5 billion in sales last year, was trading for $39.26 on the Nasdaq Wednesday afternoon, up 30 cents, or 0.77 percent.