It will take some convincing for Wall Street to feel comfortable with Symantec’s US$13 billion (NZ$18 billion) acquisition of Veritas. Symantec’s stock has lost nearly half its value since the acquisition was first announced a year ago and the recent departures of former chief financial officer Greg Myers and president and chief operating officer John Schwartz have only exacerbated fears that the acquisition may prove to be more than the company can manage.
But for Symantec’s chief technology officer, Mark Bregman, the combination of the storage and security software giants represents a brand-new opportunity — the chance to build a world-class research organisation.
Bregman knows the value of research. With a Columbia University PhD in physics, he was a manager within IBM’s research division and, in the mid-1990s, he had a hand in revamping Big Blue’s patent policy.
Bregman, a former Veritas employee, has some busy days ahead, though, as he struggles to bring his company’s nascent research operation, Symantec Research Labs, into the big league. Symantec is better known for acquiring companies than for doing basic research and at present it has only one employee who spends any time on the kind of unfettered research that has made IBM’s programme famous. That employee, noted computer scientist Michael Spertus, also came to Symantec as part of the Veritas acquisition.
The post-Veritas Symantec, however, is now a much larger company, with 14,000 employees. Veritas also brings it an extra US$1.5 billion in annual revenue. With the acquisition, Symantec now has the financial clout to build a first-class research organisation, Bregman says.
“It gives us scale — there’s a critical mass [required] to do this work.”
Symantec Research Labs is mainly focused on developing technology that will be used in future products. With a staff of about 50 — who are generally co-located with product development teams in Mountain View and Santa Monica, as well as in Pune, India — it draws about 1% of the company’s total revenue in funding. Symantec’s total spending on new product research and development is about 15% of revenue, Bregman says.
He plans to boost the number of employees doing basic research and development. “We’re just starting to invest in that basic research piece.”
By building up its lab staff, Symantec is not only placing a bet on its next generation of products, but it will also be better able to motivate employees and attract top technical talent, Bregman says.
Whether a bigger R&D arm will help observers better understand the Veritas acquisition is unclear. At a press event last month, Symantec researchers displayed a number of projects, including a database auditing appliance and a new storage file system called StarFS, but none of the projects reflected Symantec’s stated belief that the future of storage and security technologies will be intertwined.
However, it’s been less than five months since the formal conclusion of the Veritas buy and Bregman is going to need more time to set a strategic research direction for the new company, says Andrew Janquith, a senior analyst with The Yankee Group. “There’s bound to be a lot of stuff that isn’t obviously going to overlap at first,” he says. “Symantec’s challenge is to identify the areas where combining research and product development makes sense.”
Janquith and other analysts give Symantec high marks for integrating its Symantec Mail Security for Exchange product with the Veritas Enterprise Vault software but, when will they see cutting-edge storage security technology coming out of Symantec’s fledgling labs?
Soon, says Bregman. “I think that’s going to become a bit more clear as more of the interesting solutions start to come out.”