Will Post-Split Symantec Go More Direct With Managed Services?
In a not-unexpected reversal of one of the highest-value blockbuster tech acquisitions of all time, Symantec (SYMC) this week definitively announced that it would be selling off its Veritas Info Management Business to private equity firm The Carlyle Group in an $8 billion deal at the start of 2016.
It’s a move that has been long-anticipated and wished for by numerous market stakeholders, including customers, shareholders and partners. For partners, the split makes sense considering that the partner community has remained divided in market segments across the same gulf that the company ultimately could never bridge between the original Veritas storage and back-up business and Symantec’s security business.
After the dust settles
Already, channel executives bound for Veritas have gotten proactive about explaining to channel partners the benefits of sticking with the info management business once it goes private. The company is already telling the channel media that it will be focused on increasing its mix of managed services partners.
The question remains how the move will affect MSPs and MSSPs on the security side of the house as Symantec itself adjusts its business following the split. First hinted at by company leadership last October, the division was deemed necessary for Symantec to redirect focus on its core security business.
“The sale of Veritas marks a significant inflection point for Symantec,” said Symantec CEO Michael Brown in the company’s earnings call this week. “Upon closing of the transaction, Symantec will be focused as the world’s largest cybersecurity company in a rapidly growing market.”
Tough quarter for Symantec
It couldn’t come at a more dire time for the company, which also this week reported dismal quarterly earnings, particularly in its security business groups. According to executives, last quarter Symantec’s Consumer Security segment revenues were down 19 percent year-over-year, while its Enterprise Security division suffered a 13 percent decline in revenues. The numbers are bad enough on their own, but when compared to overall security market dynamics they look worse—according to Gartner, security is one of the more promising segments in IT, with security software growing over 5 percent in 2014.
Brown told shareholders that the deal will give Symantec the financial flexibility to accelerate its Unified Security strategy, which depends on three major elements: Symantec’s security analytics platform, its consumer and enterprise security software and its cybersecurity services business. It’s how Symantec handles that last leg of that three-legged stool that MSPs will likely watch closely to understand whether Symantec will make any changes in its partner ecosystem for driving services-related business.
The silver lining
In the earnings call, Brown pointed to Symantec’s Cybersecurity Services and its Trust Services businesses as the silver lining to the earnings cloud, as these segments each saw about 3 percent growth last quarter.
It’s clear that Brown and his team are bullish on the company’s prospects for delivering its own managed services solutions direct to customers, telling investors of the success the company has had in rolling out its new CyberOne incident response offering and its ATP managed monitoring service last quarter.
What’s not yet clear is whether the company will double-down on that strategy, potentially leading to conflict with partners who depend on its technology to deliver their own security service offerings. Symantec still seems to be working on answers to questions like these—its representatives didn’t have any comments to provide for this story.
Symantec and MSPs
But given Symantec’s work in the past years to build out support for MSPs, analysts are hopeful it will maintain this course even as it tweaks other parts of its business model.
“MSPs/MSSPs have long been an important channel for Symantec and the company’s decision to entirely focus on security should result in more, not fewer opportunities for mutual cooperation and benefit,” says Charles King, principal analyst for Pund-IT. “Symantec obviously wants to build up the higher margin parts of its business, like the Cybersecurity Services and Trust Services divisions but there are many markets where MSPs/MSSPs can provide more preferable channels to customers. I expect Symantec understands that and will act accordingly.”