In an industry swimming with fish of all sizes, 2006 will remembered as the year in which the storage predators went to lunch. After its multi-billion dollar purchase of industry leader RSA Security, EMC is looking like the cat that got the cream.
RSA “invented all the core encryption technologies on the Internet and they have an 80 percent market share of authentication,” says Dennis Hoffman, vice president of information security at EMC. “They were such an early mover that the industry conference is named after them and they run it. So this is the best home-field advantage in business.”
EMC says its deep pockets allowed it to outbid heated competition, which now must cobble together a plan B. Our competitors “have to buy an encryption company, a key management company, an authorisation company, an authentication company, and knit all that together. The execution risk is gigantic on that stuff,” says Hoffman.
Others are claiming that they also have the security nous to stay in the storage business. Or the storage ability to stay in security, as Symantec puts it.
“The difference is that we saw it first,” says David Sykes, Symantec APAC vice president, which bought up tape backup specialist Veritas. “And by the way let’s point out that two years ago when this was announced, the very organisations that have made these security acquisitions were saying that it’s never going to happen.”
The rationalisation of the storage and security industries will inevitably squeeze out some large players, although it’s still too early to know who is going to fall. Sykes also adds IBM with its ISS purchase, Cisco and Computer Associates to the list of opponents.
“I think everyone is heading towards the same place. [But] I don’t think it puts us in any further competition than we already we were,” says Sykes.
One of the difficulties that all faces all acquirers is that their new purchases are already up to their arms in partnerships with some of their new parent company’s competitors.
The solution has been to maintain the smaller unit as an independent unit operating at arm’s length, like VMWare within EMC and Decru within Network Appliance, says Steve Bracken, business development manager at Decru.
“Things haven’t changed that much,” Bracken says, and Decru is continuing to work with EMC and fulfil its OEM relationship with Quantum.
There are plenty who think that EMC paid far too high a price for RSA, at least for its current assets. “We haven’t yet seen the full story because EMC would not have paid the price they did for RSA’s current business,” says IDC analyst, Graham Penn.
And although the spate of mergers is slowing, simply throwing down the money is the easy bit. Integrators must be prepared for a little corporate indigestion, the effects of which can often flow down through the food chain.
Mergers “have to be very carefully managed to make sure you get what you want out of it and not a massive culture clash,” says Neil Campbell, Australian national security practice manager, Dimension Data.
Market heats up after feeding frenzy
By Sholto Macpherson on Nov 15, 2006 10:43AM