Technology industry consolidation -- even some of Symantec Corp.'s own acquisitions -- have caused disruption in...
By submitting your email address, you agree to receive emails regarding relevant topic offers from TechTarget and its partners. You can withdraw your consent at any time. Contact TechTarget at 275 Grove Street, Newton, MA.
the channel over the past few years, acknowledged Symantec CEO John Thompson at this week's Partner Engage conference.
But Symantec's big transformation period is over for now, he said. He warned, however, that technology industry consolidation is an irresistible wave and that consolidation within the channel itself is "inevitable."
"As manufacturers continue to consolidate, you too will follow that path," Thompson predicted.
CDW Corp., for example, bought Berbee Information Networks late in 2006, before selling itself in May of this year to Madison Dearborn Partners -- a Chicago-based private equity firm -- for $7.3 billion.
Just this month storage service provider Incentra of Boulder, Colo. announced it was buying SSI hubCity, a Metuchen, N.J.-based Sun partner; Houston-based Cisco integrator INX said it had bought another voice specialist, Select, based in Canton, Mass.; and Sirius Computer Solutions in San Antonio bought Syracuse, N.Y.-based Strategic Computer Solutions.
"Channel partner consolidation should continue to be aggressive for the foreseeable future," according to channel analyst Paul Myerson at the Enterprise Strategy Group. "Solution providers are [more] strategic than ever for both the top-tier vendors like IBM, HP, EMC, etc. and the emerging players such as Asigra, CommVault and Compellent."
Channel companies are responding to that importance by expanding -- acquiring an expertise or specialty rather than spending time and effort to build that capability, or to build a presence in a particular practice area, Myerson said. As solution providers continue to become more important to IT vendors trying to reach the midmarket in which the channel rules, such acquisitions will become not only more common, but higher profile, as well, he said.
Aside from their warnings about technology industry consolidation, Thompson and other executives were at times apologetic to partners who have had to adjust to each new Symantec acquisition and cope with Oasis -- an internal plan to streamline Symantec's business processes, which backfired by disrupting the channel with long delays in partner service, support and delivery.
"We put the partnership through a huge test," said Randy Cochran, vice president of channel sales in the Americas. "We have been tough to do business with. We're fixing that."
"We've stopped the major bleeding," said Julie Parrish, vice president of global channel sales.
When asked during a question-and-answer session if the major technology industry consolidation will continue, Thompson said, "I don't envision over the next 12 months some big transformational transaction." He later added, "I'm never going to rule out the possibility of doing something that enhances our standing in the marketplace."
In a post-session interview, the partner who asked about Thompson's acquisition plans said he understands why Symantec has had so many acquisitions, and generally approves -- even if some of the corporate integration caused some problems in the channel and in his own business.
"It's not [Symantec's] fault," said Adam Gray, chief technology officer for Novacoast, a solutions provider in Santa Barbara, Calif. "They're doing what they need to do, and I need to keep up."
At one time Novacoast competed with Altiris -- the IT asset-management provider Symantec bought last January -- and had to re-examine that part of its business when Symantec bought Altiris, Gray said.
For the most part, Symantec's acquisitions go well for partners, said Andrew Grose, president and CEO of Nortec Communications in Falls Church, Va. Nortec was a Veritas partner before Symantec bought Veritas, and that partnership has been strengthened, Grose said.
"They've done a really good job of integrating Sygate" as well, he added.
The next major issue facing partners will be consolidation in the channel, Thompson predicted. He said that partners have two options for success: either focus on one specific area and be extremely skilled in it, or offer a broad range of products and services.
Nortec has acquired "a few" other value-added resellers (VARs), but Grose said he has not seen mass consolidation in the channel.
"There isn't yet, but maybe ultimately there will be," he said.
Novacoast has also purchased three other channel companies. Like vendor acquisitions, those within the channel also keep partners on their toes, Gray said.
"The more consolidation there is, the more we have to keep up," he said.
Symantec's Cochran also suggested that partners can join forces without acquiring one another, to help each other compete in a consolidating channel without making such a drastic change. Novacoast, for example, has partnerships with about 10 other companies, Gray said. Most involve the exchange of services, Novacoast's specialty, for software, Gray said.
But Cochran said that full-on acquisitions can also help partners and bolster Symantec's standing in the channel.
"I think it's good," he said. "The vast majority of them are, coming out the other end, much stronger and much more diverse."