Symantec Slips on Storage

A year and a half after buying Veritas, Symantec continues to struggle with its storage software business.

In a statement this week, Symantec lowered guidance slightly for the latest quarter, which will be reported on January 24, to a range between $1.30 billion and $1.32 billion and also lowered its estimates for the year by about three percent to a range between $5.14 billion and $5.16 billion. (See Symantec Cuts Earnings Forecast.)

Execs blamed the company's disappointing performance last quarter primarily on poor sales of its Data Center Management products -- even though CEO John Thompson says a lot of lost revenue was deferred to future quarters. The products in question consist mostly of Veritas backup and recovery, storage and server management, and application monitoring products.

The Veritas complaint is now an all-too-familiar one. Symantec has had a tough time living up to its forecasts since its $13.5 billion Veritas acquisition closed in July of 2005. (See Symantec & Veritas: It's a Deal, Symantec Slips in Europe, and An Off Quarter for Symantec.)

But Wall Street analysts say the latest troubles are specific to Symantec, rather than the storage industry. The fourth quarter is usually good for storage sales, and the large systems vendors are expected to announce strong results over the next few weeks. (See Analysts See Mostly Bright Earnings.)"The fact remains that Symantec has only had one solid quarter since the Veritas merger closed," analyst Kevin Buttigieg of A.G. Edwards wrote in a note to clients today. "We think Symantec's weakness is probably partially related to economy and more to execution."

Analyst Shebly Seyrafi of Caris & Company agrees. "The storage market is strong and growing, and we believe Symantec's problems are firm-specific," Seyrafi wrote in a research note today. He estimates Symantec's backup and recovery products lost five percentage points of share in the fourth quarter of last year, with CommVault gaining three points and EMC two.

The issue isn't lack of interest in the Veritas lineup. Symantec has continued to enhance the line, upgrading its storage and server management, disaster recovery, disk-based backup, and storage security features. (See Symantec Adds Crypto to Backup, Symantec Swallows Revivio, Symantec Targets Disk, Users Talk Virtual Tension, and Symantec Announces 5.0 HA.)

The deeper trouble seems to have dogged Veritas since the time of the acquisition. Storage analyst Stephanie Balaouras of Forrester Research says that in storage management and application monitoring, Veritas was still digesting and integrating products from its own previous acquisitions. At the same time, Symantec had some challenges too. On the backup and recovery side, there was increased competition from disk-based backup and wide area file services (WAFS) products. Also, CommVault had emerged in the midrange and Microsoft in the entry-level backup spaces.

Now, Balouras says she's optimistic about the combined company's data protection products but sees ongoing challenges in the data center lineup. "I think their data protection is in good shape now, with recent announcements around Backup Exec, PureDisk, and encryption," Balaouras says. "I see them shoring up what might have been gaps in their solution... On the data center side, they had a convoluted story there. There were so many acquisitions. I dont think they really integrated well or presented a cohesive story around their data center. I think they have a good chance of pulling that together now with latest Storage Foundation and Server Foundation products."While Symantec struggles to get its act together, at least one customer says support has been lacking. Ben Weinberger, director of IT for Fort Lauderdale-based law firm Ruden McClosky, says it took nearly two months and a series of emails and phone calls to get a valid license key to update his LiveState bare metal restore product.

"Symantec is falling down all over on simple support things," Weinberger says.

He was unhappy with support for LiveState when he first purchased the product before the Veritas acquisition. He had no problems with Veritas' Backup Exec support, so he hoped for the best when Symantec put LiveState into the Backup Exec family last year. Then he tried to upgrade the product last November.

"I said 'hopefully there's a little synergy going,' but we've been going around in circles forever on this licensing thing," he says.

Weinberger says he's happy with the product, but "at some point you say, 'Well, does it make sense to buy from these guys if their support is going to be this poor?' "But at least one other customer says he's had no issues with support and finds the latest version of Veritas Storage Foundation 5.0 High Availability (HA) for Windows far easier to use than its predecessor. Jerry Craft, manager of network services for Farmers & Merchants Bank of Long Beach, Calif., was a beta tester for the new release and says he plans to use it to replicate his SQL server to a remote location for disaster recovery.

"We're building a DR site," Craft says. "When Veritas was running the show with Storage Foundation, configuring a server was difficult. You had to read the entire manual and go through a lot of steps to get it done. It was convoluted. They've made it much easier now."

— Dave Raffo, News Editor, Byte and Switch