Questions on Symantec’s Future Arise After CEO Exit

Following the sudden dismissal of former Symantec CEO Steve Bennett late last month, many questions linger about not just who will replace him, but ultimately what kind of company Symantec will become.

Symantec has been essentially a holding company comprised of three major lines of business for most of the last decade. The first is a security business, where its brand is well-known among retailers and channel partners. Its second major line of business is backup and recovery applications, where the company still dominates the market. Finally, there’s the Veritas business built around what is now a venerable file system that Symantec acquired in 2005 for $13.5 billion.

The challenge facing the company now is that all three of these business segments are under assault by innovative technologies that threaten to obsolete large swaths of the Symantec product line. For example, while antivirus (AV) software is routinely used by almost everybody, many upstarts in this space have successfully turned AV software into a commodity market with razor-thin margins. At the same time, a raft of emerging security products are available and being adopted rapidly. Symantec, however, has been slow to innovate within its portfolio of security products.

Backup and recovery is almost as routinely used. But with the advent of cloud computing, Symantec has found that turning backup and recovery software designed to handle terabytes of data into a service that can manage petabytes of data problematic, said Ashar Baig, an industry analyst with Gigaom.

In addition, some of the more advanced customers have begun to reduce their dependency on backup and recovery software by relying more on replication to copy data between distributed sets of applications.

Finally, the Veritas files system has been largely eclipsed by rivals such as EMC, NetApp and Hitachi Data Systems—all of which bundled hardware and software together to create appliances that now dominate the market. Symantec then attempted to respond to that shift in the market by aligning itself with Huawei, but the alliance dissolved not long after it was created.

And now in the age of the cloud, file systems in general are being replaced by object-based storage systems in the cloud that scale better at a much lower cost, Baig said. “It used to be that you could get $1 per gigabyte for storage; now it’s down to 25 cents,” Baig said, adding that Amazon and Google are driving those prices down further.

These issues, combined, are creating calls among investors for Symantec to divest itself of one or more of these businesses. Against that backdrop, Symantec has been revamping its entire channel program as part of an effort to become more profitable and simpler to do business with. But for the past decade, Symantec has been managing three separate channel programs—rather than creating a unified program across its product lines.

The most important challenge facing Symantec now, said Tricia Wurts, principal with the channel consulting firm Wurts and Associates, is quickly finding a CEO who can restore confidence while continuing to execute on its channel strategies.

“Most companies can survive turmoil at the executive level or turmoil in the channel,” said Wurts. “Few companies can survive turmoil occurring in both of those places at the same time.”

Michael Vizard has been covering IT issues in the enterprise for 25 years as an editor and columnist for publications such as InfoWorld, eWEEK, Baseline, CRN, ComputerWorld and Digital Review.