Veritas Nabs Ejasent

Veritas Software Corp. (Nasdaq: VRTS) hopes to close this month a $59 million cash transaction to purchase Ejasent Inc., a maker of application management software (see Veritas Buys Ejasent).

Ejasent, located as Veritas is in Mountain View, Calif., has 21 employees, most of them engineers who will join Veritas's High Availability/Clustering group. Ejasent's co-founder and CTO, Rajeev Bharadhwaj, will be joining Veritas, though several other Ejasent execs won't be, including CEO Jason Donahue, CFO Kent Jarvi, and VP of sales and business development Gerald F. King.

The purchase is third in a series meant to increase Veritas's presence in so-called utility computing, which refers to streamlining IT resources to achieve the kind of ready access that comes with water, gas, and dialup phone services.

Veritas's other two buys include the purchase in May 2003 of Jareva Technologies, which makes server provisioning software; and the June 2003 purchase (after protracted negotiations) of Precise Software Solutions, which makes performance management software (see Veritas to Acquire Precise, Jareva, Veritas Moves up the Stack, and Veritas Picks Up Precise).

After the Ejasent buy, Veritas will have spent $730 million to date on its utility computing acquisition spree -- Precise cost the company $609 million, and Jareva $62 million. And it's likely there are more purchases in the pipeline: Veritas has $2.3 billion in cash on hand, which isn't expected to change much with its next quarterly report on January 28.At least one analyst thinks Veritas's latest acquisition is a response to similar buys by competitors such as EMC Corp. (NYSE: EMC), which purchased VMware, a maker of server virtualization software, in December (see EMC Gobbles VMware).

"It's a close response to EMC buying VMware, which I thought was partly a response to Veritas buying Precise and Jareva," says Arun Taneja of The Taneja Group. "Veritas and EMC are really smashing each other."

Both seem bent on making their storage wares part of the larger landscape of utility computing. Is the tack working for Veritas? "It's too early to know," says analyst Drew Brosseau of SG Cowen Securities. "We have to see how they execute." He says Veritas needs to provide a compelling reason why customers should buy system management from them and not from companies with longstanding presence in the market, such as Computer Associates International Inc. (CA) (NYSE: CA) and IBM Corp. (NYSE: IBM).

Veritas is undaunted by any hint that it's facing a competitive problem in moving from storage management to utility computing. "At the end of the day, the worth of IT is evaluated by whether applications are running," says Bob Maness, Veritas's senior director of product marketing. While storage management is part of that, its future lies in how well it can be integrated with application management in increasingly automated solutions.

In its favor, Veritas's strategic track record is solid. In the recently published Heavy Reading Fall 2003 Storage Networking Market Perception Study, the company ranked first in name recognition in a survey of 380 buyers and users of storage area network hardware and software (see A Moment of Veritas). Veritas also finished first in product performance and product quality and reliability.Veritas expects the Ejasent buy to be accretive this year -- in contrast with the disappointing lag experienced with Precise (see Veritas Has Double Vision). According to Maness, Veritas will start selling the vendor's main products, UpScale and MicroMeasure, during the second quarter of 2004.

Veritas also plans to integrate Ejasent's wares into its own products, in contrast with plans to keep selling Precise and Jareva's software standalone. By 2005, UpScale, which enables IT personnel to move applications from one server to another without disrupting their delivery to end users, will be integrated into Veritas's Cluster Server product, which performs application recovery. By the same time, MicroMeasure, which tracks usage-based billing of IT assets, will be integrated into CommandCentral Service, which includes a series of products for utility computing.

Mary Jander, Site Editor, Byte and Switch