Storage Soup

Jul 31 2008   3:06PM GMT

Symantec storage revenues stay solid, while channel unrest continues

Beth Pariseau Beth Pariseau Profile: Beth Pariseau

According to Symantec’s earnings call last night, updates to NetBackup announced at Symantec Vision in June helped keep its storage business strong this quarter. Storage and services revenue increased 20% year over year to $616 million, which COO Enrique Salem attributed in part to new NetBackup features such as continuous data protection (CDP) and integration with PureDisk data deduplication.

The ability to offer customers one throat to choke for storage management, archiving and backup has also paid off, according to Salem, as the sales force focused on selling across product groups. Enterprise Vault sales grew 30% year over year, and the product enjoyed some good publicity this quarter with selection to various analyst product rating lists and customers raving at Vision about its features. The Storage Foundation product line also “posted its best results in years,” according to Symantec, though numbers weren’t given.

Symantec has had a rocky time of it in the recent past, especially over the last year, following frequent managment shifts and its market share slipped in IDC quarterly tracker reports on the storage software market. As recently as last quarter, there was speculation that Symantec would sell off its storage business units.

But during last quarter’s earnings call, Symantec also reported good growth for its storage business units. Email archiving, backup, and storage management were among the product segments that posted double-digit year over year growth for Symantec’s fiscal fourth quarter.

There’s one dark cloud still threatening to rain on Symantec’s parade, however — its sales channel. Earlier this month it was reported that Symantec would be going direct with its largest customers, a report that was later contradicted by top Symantec channel executives.

That hasn’t stopped unrest among channel partners whose feathers were ruffled by the original report, and it hasn’t stopped Symantec competitors from swooping in to try to take advantage of the confusion. Following last night’s earnings call, skepticism over Symantec’s “conflicting channel messages” seemed to have spread to financial analysts, as well. According to a note to investors sent out by TBR:

Although Symantec defends the announcement by explaining that its strategy actually hasn’t changed, but that it only made its customers aware of the option to go direct, TBR believes the damage has already been done in the partner community. Symantec competitors wasted no time in stepping in to try to lure Symantec partners away, as Trend Micro and other smaller players made bids for Symantec’s partners by pushing their own channel programs during the confusion. Although the strategy would give Symantec more control over cross selling its portfolio in its largest accounts and potentially improve margins, TBR does not expect the change to make a big impact on either metric. However, greater involvement in large accounts from the direct sales force will give Symantec more control over cross selling products across its portfolio to drive new license revenue in existing accounts.

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