Rarely does one wake up to read earth-shaking news in the enterprise data protection industry. However, today represents one of those days with the announcement that Cohesity will acquire Veritas NetBackup. I mean, how often does an emerging enterprise data protection provider boldly step out to acquire an established one? Ah, never. Yet in digesting this news, I begin to see the logic behind this transaction and why this shake-up was needed.
Key Insights from Press Releases
- Cohesity intends to combine with Veritas’ data protection business (NetBackup), which will be carved out of Veritas.
- High penetration in the enterprise with 96 of the Fortune 100 and 80 percent of the Global 500.
- Will target a total addressable market of over $30 billion.
- Will have combined revenue of over $1.6 billion and over $1.3 billion annual recurring revenue.
- Remaining assets of Veritas will form a separate company called DataCo that will consist of Veritas’ InfoScale, Data Compliance, and Backup Exec businesses.
This new combined company intends to continue to invest in and advance the data protection offerings from both companies. This includes all Cohesity products and services as well as Veritas NetBackup, NetBackup appliances, and Alta data protection offerings. They also will work towards delivering an integrated solution that combines the best technology across both companies.
However, a statement by Sanjay Poonen, President and CEO of Cohesity, probably best hints at the real benefit of Cohesity’s acquisition of Veritas. He says, “This deal will combine Cohesity’s speed and innovation with Veritas’ global presence and installed base.” This comment hits on why Cohesity felt compelled to buy Veritas and why Veritas agreed to the transaction.
Enterprise Data Protection Has Changed…
Everyone involved in enterprise data protection knows it has changed in ways no one could have completely anticipated. In the last 30 years, enterprises have seen the rise of:
- Client-server computing.
- Cloud computing.
- Cloud storage.
- Data leakage.
- Edge computing.
- Hybrid environments.
- Data stored in cloud SaaS applications.
- Shadow IT
- Windows, Linux, and Unix operating systems.
All these and many more forces have created entirely new requirements that enterprise data protection solutions must satisfy.
The challenge becomes how do any existing enterprise data protection solutions change enough to keep pace? Often, they cannot. They must operate in mission-critical, always-on environments that abhor change of any kind.
This puts them in a conundrum. If they change their data protection software that runs in these environments, they risk alienating their customers. Yet if they stand pat and do not change, they become one-trick ponies and do not expand beyond their current user base.
…and NetBackup has not Changed Enough
To Veritas’ credit, it has done well in trying to balance NetBackup’s feature development between reliability and innovation. Over the decades, it has acquired multiple competitors, introduced new features, and provided complementary products.
However, Veritas has played those cards with NetBackup as long as it could. It now needs to make some fundamental changes to NetBackup’s underlying technology to keep pace. Absent that, it probably faced a growing number of losses to its competitors.
If anything, its biggest asset remains its large presence in enterprise accounts. However, if it did not capitalize on that strength soon, it faced a much less certain future.
Fortune Favors the Bold
The news today that Cohesity intends to acquire Veritas NetBackup initially left me a bit stunned. Who would have thought such an acquisition would ever occur where the smaller fish would eat the bigger one? However, fortune favors the bold and Cohesity’s acquisition of Veritas NetBackup represents a bold move on its part.
Further, it almost had to happen the way that it did. Cohesity positions itself as an enterprise data protection player but knocking off one or two Veritas NetBackup accounts every year will not get it there. Conversely, Veritas NetBackup did not want to be seen as yesterday’s enterprise data protection news.
This acquisition gives both companies what they want and enterprises what they need. Veritas NetBackup gets the next-generation technologies in the form of AI, hyperconvergence, and a cloud platform that it needs to stay relevant. Cohesity gains immediate access to enterprise accounts and the ability to set NetBackup’s future technology direction by owning NetBackup. Finally, enterprises obtain a technical path forward that does not require them to abandon their investment in NetBackup.
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