CA, for one, insists that there is nothing threatening about the move. "The question is: Will the market wait for EMC to conclude their digestion process?" asks Bob Davis, VP of BrightStor Solutions at CA. "The market is moving too fast for customers to wait for this or any vendor to assimilate a complicated set of acquisitions."
Many analysts, too, say EMC will likely face substantial challenges as it attempts to swallow Legato and sustain the Legato image of an independent, open software vendor. "The challenge for EMC is going to be in making this acquisition actually work for them, and I personally think they're going to have to work very hard," Webster says. "They're perceived as a hardware company with a hardware axe to grind. If EMC wants to keep that momentum going, it really has to shed itself of that hardware image."
EMC's hardware legacy could also prove a sticky point with Legato's existing OEM partners. Sun Microsystems Inc. (Nasdaq: SUNW), IBM Corp. (NYSE: IBM), and Hewlett-Packard Co. (NYSE: HPQ), for instance, are surely less likely to cooperate with Legato if it's part of archrival EMC.
Losing these partnerships will, however, probably be more than offset by EMC's market leadership and Legato's installed base, Robert W. Baird & Co. Inc. analyst Daniel J. Renouard wrote in a note today, pointing out that EMC's sales channels could drive market growth for Legato products.
But then, of course, there's the integration of Legato's products and sales force. "This clearly does offer some strengths in terms of the complementary product lines -- there are only a few products that overlap -- and a complementary sales force," says IDC analyst Fred Broussard. "But how much integration has been done at the mid-management level... and how will the overlap between [Legato's] NetWorker product and the EDM [EMC Data Manager] product be handled? That needs to be managed."
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