Veritas Buys More Utility Power

Veritas Software Corp. (Nasdaq: VRTS) spends even more money than major league baseball teams on utility players. Continuing a shopping spree that began around two years ago, Veritas has paid $35 million in cash for storage automation startup Invio Software Inc. (see Veritas Buys Invio).

Veritas sees Invio as another piece of its utility computing strategy, geared to products that provide storage resources as needed, with hardware reconfiguration. Veritas already licenses Invios process automation engine, which is included in its CommandCentral Service application through an OEM deal (see Veritas Upgrades Utility Player).

So why pay did Veritas pay $35 million for technology it already had? Because Veritas wants to control where that technology is going. “Owning the technology allows us to have more control over the roadmap,” says Nick Mehta, product manager for Veritas’s utility computing products.

The acquisition also gives Veritas Invio’s development team. Mehta says the team will join Veritas, along with other “select employees” from Invio. Most of Invio’s 34 employees are developers. Veritas won’t yet say whether any of Invio’s executive team will be brought aboard.

Sources say the deal may have saved Invio from closing its doors because of lack of revenue. Invio was able to generate only three OEM deals since it was founded in 2000 under the name Filestra (see It's All Go at Invio). One of those deals was with BMC Software Inc. (NYSE: BMC), which folded its storage division in February 2003 and no longer had a need for Invio's software (see BMC Folds Storage Unit). Veritas and McData Corp. (Nasdaq: MCDTA) were Invio's other OEM customers.“Now we’ll have discussions with McData,” Mehta says about the status of that deal.

Invio is the fourth acquisition Veritas has made to stitch together its utility computing platform. In 2002 it picked up server provisioning with the acquisition of Jareva Technologies for $62 million. Last year, Veritas dropped $609 in cash and stock for performance management software maker Precise. It bought application management software company Ejasent for $59 million in January 2004. (See Veritas Nabs Ejasent, Veritas to Acquire Precise, Jareva, Veritas Moves up the Stack, and Veritas Picks Up Precise)

Still, most of Veritas’s revenue comes from backup and recovery software, with utility computing a small but growing segment. The latest purchase shows it continues its commitment to utility computing, after completing a disappointing financial quarter (see Veritas Takes a Dive).

Veritas isn't the only storage company betting on utility computing. IBM Corp. (NYSE: IBM), Hewlett-Packard Co. (NYSE: HPQ), and Sun Microsystems Inc. (Nasdaq: SUNW) all have major utility initiatives; and EMC Corp. (NYSE: EMC) moved in that direction last year by acquiring server provisioning software vendor VMware Inc. (see EMC Gobbles VMware).

Utility computing certainly seems to be on users’ minds. A recent survey of more than 250 senior executives worldwide conducted by the Economist Intelligence Unit, a research group affiliated with The Economist magazine, found 44 percent plan some type of utility computing strategy.Veritas appears to be finished with utility acqusitions now, as the focus shifts to putting the pieces together. “Now we’re keeping the focus on integrating our technology and tying it into our other systems," Mehta says.

— Dave Raffo, Senior Editor, Byte and Switch