Guest Blog: Symantec/Veritas deal could provide McAfee with an opportunity to regain lost markets
Mark Coker represented Symantec competitor McAfee for about four years from June 1993 to July 97. He says there are some lessons Symantec could learn from McAfee's attempts to grow by acquisition-Tom Foremski
Symantec's acquisition of Veritas risks paralleling a similar strategy pursued by McAfee Associates in the mid '90s that ultimately failed. In early '94, company management believed their annual antivirus revenues, which were then at around $15 million, would peak soon around $20-$30 million (yes, really), so they decided to use their cash hoard and strong cash flow to diversify their product line by creating an integrated suite of network security and management tools. As inspiration, they looked to Microsoft, who had obliterated its desktop productivity app competitors in the early '90s by coming out with Microsoft Office, an integrated suite.
McAfee made numerous acquisitions over the next few years, leveraging their high flying stock as currency. Acquisitions included network management, additional network security (encryption, firewalls, etc.), systems management, help desk and storage management products, and made an unsuccessful bid to acquire Cheyenne Software. (Cheyenne was then one of the three storage management leaders along with Veritas and Legato. Although the attempted Cheyenne acquisition failed to happen, the industry took McAfee seriously from then on). McAfee ultimately acquired Network General, the Sniffer company, and renamed the combined entity Network Associates. Most of the acquisitions languished or imploded, while anti-virus became the little-engine-that-could and exploded beyond anyone's expectations.
More recently, the company sold off or closed its distracting diversions, returned to its security roots, and changed its name back to McAfee.
Why did McAfee's strategy fail?
1. McAfee/Network Associates never fully executed on its grand plan to create integrated suites, and it's questionable whether customers ever wanted integrated suites. Customers ultimately chose best of breed point solutions over McAfee's kludgey integrations (which were often dissimilar point products thrown together into a box with integration that ran no deeper than the shrinkwap).
2. The alleged book cooking scandals under then-CEO Bill Larson knocked the wheels off the wagon for a few years (for the best summary anywhere of those wild years under Larson, check out Elise Ackerman's cover story in the San Jose Mercury News that appeared February 15, 2001).
3. Culture clashes with acquired companies.
Will Symantec's bold gambit be a spectacular failure too? I don't know. While I doubt everything will go as smoothly as Symantec anticipates, times have changed and there's more reason today for storage and security to become integrated disciplines. To succeed, however, they'll need to successfully integrate company cultures; hold on to Veritas' best employees; not over-reach the reasonable bounds of what should become integrated and what should remain standalone; maintain, protect and expand Veritas' customer base; successfully navigate the often separate and sometimes competing corporate IT purchasing feifdoms of Storage IT and Security IT; not become so distracted by expanded focus that they fail to protect their security franchise; prepare to compete head-on with EMC and other storage vendors who are now to a greater degree staking their own futures on storage management software; and stave off Microsoft's incursion into anti-virus and anti-spyware (curiously, Symantec has been late to the anti-spyware game).
Ironically, Symantec's move into storage management and the distractions that will follow will ultimately benefit McAfee, now the security pure play. Security customers ultimately choose vendor partners they view as specialists, for the same reason heart surgery patients wouldn't choose a general practicioner to perform a triple bypass operation.