Almost two years have passed since international security software company Symantec Corp. (Nasdaq: SYMC) acquired Veritas in a huge, $13.5 billion deal, yet the merger between the two companies is still far from complete. Symantec, which following the merger switched its focus from pure security to enterprise infrastructure software, has recently begun providing joint solutions, although the organizational changes will, without doubt, take a lot more time. What's more, since acquiring Veritas, Symantec has continued its M&A activity in the technology markets. The balance so far stands at 20 companies worth in excess of $20 billion, the latest of which was Altiris Inc., acquired at the beginning of April for $830 million. The newly-merged Symantec has packaged its new vision under the title "Help with Enterprise IT Risk Management." The company has included under this umbrella enterprise IT system availability risk management, data security, application performance management, and regulatory compliance.
Not surprisingly, Symantec shows no signs of stopping and has already identified new growth engines. "I think that what's happening is that security needs are changing," says Mark Bregman, CTO at Symantec and the person who is, in effect, leading the strategy of the world's fourth largest software company, in an interview with "Globes" during his visit to Israel last week. "Until a few years ago, we were preoccupied with system protection; now the emphasis has shifted to protecting information itself. For example, if we were to meet on the Internet, we wouldn't be sure about each other, and I wouldn't be sure that you really are who you say you are. This is one of the challenges that needs to be brought from the real world into the Internet world, since there are a lot of things that we take for granted."
Thorough research
Bregman frequently refers to the increasingly critical problem of information leakage, although Symantec's own solution for this is fairly limited. "We have a specific information leakage solution made up of ideas that we adopted from the technologies of the companies we acquired and that we integrated," he says, confirming that Symantec also looked at various options with several Israeli companies in this field. "We carried out some pretty thorough research to determine who would the best for us, and best does not just mean the best technology, but also the largest market. Israeli companies sometimes feel frustrated when American companies choose companies with inferior technology. Sometimes they're right, but very often the companies chosen are those with more market share for their solution."
Perhaps that's why Israeli companies are cheaper?
"Just a little," Bregman laughs. "At one time the differences really were a lot larger."
One gets the impression that you're not all that strong in information leakage, especially now that McAfee, Check Point, and Websense have acquired technologies.
"We have some very significant businesses in information leakage, and we have been enjoying double digit growth in this field. One erroneous perception, which the media encourages, is that you're only worth a news report if you acquire something. But if you develop something in-house, it's not worth a headline. We have a business and products, and we're selling. This is a market which is not yet mature and it will be some time until we see someone taking the lead in it. We feel that we are well-placed to take a central role here. I think that this field is very hot at present, but in two to three years time it will no longer stand out because there will be a solution. In two or three or years from now the solution will be there as will the problem, but it won't be hot news any more."
It looks as though the competition is intensifying. How do you feel you compare with Check Point, Microsoft, or IBM as competitors?
"The challenge is that a lot of companies are coming into the same space. There is a convergence taking place which is driven by the need to protect customers' infrastructure and this is critical. So we're seeing companies expand their product suites, like Check Point did when it acquired Protect-Data, or IBM which acquired Internet Security Systems, which also competes with us. And there's also EMC, whose CEO called our merger with Veritas stupid, but who last year acquired RSA Security and carried out a merger, which is actually similar to ours."
Waiting for the knock on the door
Although Symantec has made dozens of acquisitions in recent years none of these have been in Israel. Bregman, who was previously CTO at Veritas, is quite familiar with the Israeli high-tech market and he knows what it has to offer. Symantec has an R&D center in Israel, which it inherited from Veritas, which in turn took over it when it acquired Precise Software Solutions in 2002. The center in Israel focuses on application performance management, one of the key solutions that Symantec is now offering for enterprise IT infrastructure management.
"When it comes to doing business globally, our way is first to find where there is a big market. That's how we do business in China, for example. Israel, unfortunately, will never be a massive market. The second consideration is accessibility to dvelopment talent, and Israel has a lot to offer here. It is exceptionally strong in this field. China and India have a lot more engineers graduating every year, but Israel has exceptionally high capabilities.
"Why are there so many security companies in a country of six million people? It's not because you're paranoid. Well, perhaps just a bit (laughs), but the main reason is that Israel has strong capabilities in areas relevant to algorithms and math, but not applications development. Why? Because Israelis want to work on things that are specially tough.
"So there certainly are interesting opportunities here, such as Precise, which developed an extremely creative solution, and that was why we (Veritas) bought them. We may well acquire, invest in, or collaborate with a company here in the future. We're always looking at start-ups across the globe. The third consideration, when making acquisitions or entering collaborations, is finding a company that is suited to our needs."
Bregman is guarded when it comes to talking about possible strategic moves in Israel, but gives a clue to his intentions through a comment on Symantec's Israeli R&D center. "The only thing that I want to do with the local R&D center is work together with Raz or Nitzan (the managers of Symantec's R&D center in Israel, S.S.) in order to get more information on developing companies in Israel. We sit in Silicon Valley and lots of companies there come knocking on our door almost daily. But we're a long way from Israel, and there are many companies here with new ideas, only they don't come knocking on our door. I would like to get to know them better, to talk to them and find out who we can work with. We've been doing this sporadically until now, but it's very difficult without a permanent center."
Are you interested in any particular field?
"We're interested in user interface applications. I know that this is not the place to look for solutions. One of the things that I’m trying to do over here is create stronger ties with venture capital funds, so that we have more intelligence on the opportunities here."
Published by Globes [online], Israel business news - www.globes.co.il - on April 29, 2007
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