Symantec Post-Bennett: VARs Concerned About The Storage Business

As Symantec searches for a new CEO, some channel partners are hoping the vendor will be focusing more on the storage side of its business.

Symantec last week fired CEO Steve Bennett, who was in the midst of overhauling the company's product and go-to-market approach as part of a strategy called Symantec 4.0.

Symantec appointed Michael Brown, a former Veritas executive and a current member of the company's board of directors, as interim president and CEO, a move that caught some solution providers by surprise. Brown joined Symantec's board of directors after Symantec's 2005 acquisition of Veritas, where he was a member of that company's board.

[Related: HDS Signs Reseller Deal With Symantec, But Looks Inside For Long-Term Software Strategy]

Solution providers working with Symantec's storage technology expressed concern that the vendor has not been investing enough in that part of the business.

Symantec has three primary businesses, including user productivity and protection for consumers and home workers, information security for businesses, and information management, which includes backup and recovery, archiving and e-discovery.

In the fourth quarter of 2013, Symantec's information management revenue accounted for 39 percent of the company's entire revenue, or about $660 million, which was down 6 percent from the previous year.

The bright spot in Symantec's storage business comes from sales of its purpose-built backup appliances, which are hardware appliances optimized to run Symantec's data protection software.

Drew Meyer, director of product marketing for Symantec's NetBackup software and appliance, said that while he cannot comment on Symantec's overall storage revenue, the company's appliance business is doing very well.

"Customers, and therefore partners, are voting with their wallets on our appliances, and our NetBackup appliance growth is testimony to the success of the line, Meyer said.

One Symantec partner, who is still making a lot of money selling Symantec's NetBackup and Backup Exec data protection applications, told CRN the vendor needs to work on its channel program.

"Symantec has done a lot of acquisitions, and gone through a lot of integration of those acquisitions, but never made the needed changes for the channel," the solution provider said.

One of the barriers to selling more of Symantec's flagship NetBackup application is the fact that Symantec does not have a good alliance with a hardware vendor for the application, like CommVault does with Dell, the solution provider said.

NEXT: Discussions About Symantec's Storage Technology

Hitachi Data Systems in February inked an agreement to resell Symantec's storage software and backup appliance. However, HDS executives told CRN the relationship is temporary while the company looks to build its own software capabilities.

Meyer said Symantec works with all the major storage hardware vendors, and the fact that it is not tied to a single vendor is a plus. "For the channel, Symantec is in partners' revenue stream whatever their hardware vendor, even if it's Symantec," he said.
Symantec's firing of Bennett was a shock, said John Woodall, vice president of engineering at Integrated Archive Systems (IAS), a Palo Alto, Calif.-based solution provider and Symantec partner.

"Steve (Bennett) came in, readied everyone to become a services companies, got the sales team aligned, and not this," Woodall told CRN. "It surprised everybody I know."

Symantec's storage business has changed -- and not for the better -- since Symantec acquired Veritas, said Don James, CEO of Bear Data Solutions, a San Francisco-based solution provider and Symantec partner. "They haven't came out with any dynamic product updates in the last couple years," he said.

James said Bear Data's Symantec sales have fallen 80 percent over the last couple years despite fast growth of the solution provider's overall business. "CommVault has stepped up for us," he said. "And a lot of disk-to-disk solutions out there have lessened the need for Symantec software."

Symantec seems to be using licenses to attach to other vendors' backup appliances to spur the use of its own NetBackup disk-based backup appliances, another solution provider told CRN, speaking on condition he not be named.

The solution provider, which sells Symantec's NetBackup and Backup Exec solutions, said Symantec is using the "Symantec tax" to force customers from buying competing appliances from vendors including Quantum, Exagrid, or EMC's Data Domain.

For example, a customer which buys a 16-TB Quantum DXI appliance may need a 10-TB Symantec license to let it write to the appliance, the solution provider said.

NEXT: Should Symantec Break Into Two Companies?

"The street price is over $1,000 per TB, which costs more than the NetBackup license," the source said. "You don't have to be a rocket scientist to see that Symantec is steering you to their appliance. But it's been a bit kludgey, and is a fixed-block operation, not a variable block solution. It looks like Symantec is not playing with ecosystem partners as much as it needs to. For partners like us who sell a lot of Quantum, that's a real bummer. It could push customers away from NetBackup."

Woodall said sales of Symantec's backup appliances are doing very well in part because they include capabilities like deduplication and the ability to serve as a media server.

"Architecturally, it's a media server that handles dedupe and interfaces with NetBackup to do disaster recovery and more," he said. "It plays to NetBackup's strength."

As for the "Symantec tax," Woodall said it's common for vendors to use licensing to drive customer behavior.

"Symantec has levers to pull on licensing with its own appliance, just like Oracle has when it comes to its engineered systems," he said.

While speculation that Symantec might eventually split into a security and a storage vendor has been going on for years, such a split is no certainty, solution providers said.

The second anonymous solution provider was unsure whether Symantec should break off its storage business, but did say the company is a very complex one.

"Symantec doesn't seem to know what business it's in," the solution provider said. "They have so many products. You can't expect everyone to know all the products."

Woodall said he has heard such rumors for years.

"Symantec's leadership has to figure out what's core to its business," he said. "Is divestiture right? A break-up? It's far too early to talk about it."

Meyer said Symantec has taken advantage of both its security and its storage technologies, including using Symantec's CSP (Critical Systems Protection) technology to secure data on the data protection appliances. "We've hardened the appliances in ways that traditional white box storage vendors can't," he said.

Symantec has also integrated security and storage in the company's Data Insights compliance and governance technology, he said.

Meyer also said Symantec is in a position to capitalize on changes in the industry as customers' information gets transformed between virtual and physical infrastructures. "Companies are not ready to jump off their physical environments," he said. "So Symantec is in the middle, helping with the transportation."

For now, the channel will have to wait for "Symantec 5.0," Woodall said.

"We'll need time for them to see how the company does," he said. "And whoever comes in to take over will have to define its strategy quickly and communicate its plans. This market is too volatile on too many levels."

In any event, Woodall said, Symantec is not going away.

"It's a strong company," he said. "For me now, it's business as usual. We still have plenty of customers using its products."

PUBLISHED MARCH 31, 2014