Veritas Plots Its Backup Plan

As Microsoft Corp. (Nasdaq: MSFT) prepares to encroach on its turf, Veritas Software Corp. (Nasdaq: VRTS) is ready to beef up its disk-backup capabilities.

Jeremy Burton, new boss of Veritass Data Protection unit, plans to revamp his product line over the next nine months to add disk-protection, replication, and archiving features it picked up by acquiring KVS Inc. (see No Brainer: Veritas Buys KVS).

Burton moves into his EVP job as part of a company reorganization announced last week (see Veritas Regroups). He assumes the post as Veritas’s dominance in tape-backup software is challenged by the rise of disk-based backup, Microsoft’s entry into that arena, a renewed attack from EMC with its Legato software, and burgeoning success of smaller players. (See Microsoft's Recovery Plan, Microsoft Uses Veritas, and Veritas Pummeled by Panel.) Veritas is also coming off a rocky financial quarter (see Veritas Rides Earnings See-Saw).

So it’s no wonder Veritas is overhauling its data protection line, especially Backup Exec, Net Backup, and the Enterprise Vault email archive product acquired from KVS. Burton says new versions of those products will be out over the next nine months.

“People say what else can you do with backup technology?” Burton says. “We’re far from done, mainly because of new technologies. Disk is cheap, and we’re seeing an increasing convergence of replication and the technology that’s been known as backup.”Veritas has the most to lose if Microsoft succeeds in the backup space. The Windows backup market accounts for about one quarter of Veritas’s revenue. Veritas has worked closely with Microsoft on making its products work with Windows application, and even counts Microsoft as one of its customers.

“Now it gets interesting,” Burton says. “We bring a lot of value to their Exchange and SQL Server groups. But Microsoft is a double-headed beast. Actually, it has more heads than that. You have to learn to compete with parts of a company you compete with, and partner with parts of a company that you partner with.”

Veritas has time on its side. Microsoft, not known for bringing out products in time, says it will have a DPS server in the second half of 2005 and the first release won’t support Exchange and SQLServer.

“With Microsoft, you always get five-years' notice,” Burton says. “You can ignore it, which isn’t smart, or you can see if you can get there faster.”

Veritas will need to get to disk backup faster than it did email archiving. Its Data Lifecycle Manager archiving product came out late and failed miserably, forcing the company to spend $225 million on market leader KVS.“It wasn’t clear a year ago exactly how fast the market was growing, and how fast demand was going, and what functionality you needed to be successful,” Burton says. “We thought, ‘Can we get a comparable product to market fast enough or are we going to spend two years trying to catch up?' ”

If it falls behind Microsoft, Veritas won’t be able to write a check big enough to catch up.

— Dave Raffo, Senior Editor, Byte and Switch