Veritas Sees No Problem: Page 2 of 4

Gillis and CEO Gary Bloom say the guidance reflects a seasonal dropoff from the fourth to first quarters, and they see nothing wrong with the software licensing revenue they generated last quarter. As for claims by EMC that Legato is eating Veritas's lunch, they consider it no more bothersome than a gnat on a humid day.

“We didn't see any real effect of the EMC Legato acquisition,” Bloom said, pointing out that Veritas’s data protection software revenues grew $22 million from the third quarter. ”Clearly, if there's a place that people were expecting them to have an effect, it would have been with that [data protection] acquisition.”

The EMC/Legato PR machine tries to paint a different picture. It sent out a press statement this week saying Legato, which posted revenues of $77 million last quarter has replaced Veritas at more than 100 customer sites (see EMC: Everything's 'Better'). Legato also points to analyst reports claiming Veritas is priced significantly higher and customers are tired of it.

Bloom countered that Veritas replaced Legato in more than 200 customer sites during 2003, and Legato has no competitive advantage other than price. “We continue to see that acquisition [EMC-Legato] as positive for Veritas,” he said. “We haven’t seen any negative effect of them entering the marketplace. The fact that we don’t have a hardware agenda is an enormous asset. It’s no way a liability. They [Legato] have continued some of the practices we saw as an independent company of trying to win on price alone.”

Veritas and EMC battle on other fronts besides data protection. Veritas followed EMC’s December purchase of VMware for $625 million by acquiring Ejasent in January for $59 million (see EMC Completes VMware Acquisition and Veritas Nabs Ejasent). Bloom denies the two moves are directly competitive, although both acquired companies do software virtualization. The difference is: VMware works at the operating system level, while Ejasent works at the application level.