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From its strong position in product sales, the company has recently been articulating its vision for the future, which will shape the direction of development, market alliances and its approach to customers. Moving forward, Symantec is clear on where it wants to go: from a seller of point-products to a purveyor of all-encompassing information security solutions and services. It has many of the components in place for this already, and is constructing a management framework to seamlessly integrate them all, including products from its competitors of today. Bundled along with a growing interest in security services (although implementation is a task the company leaves to the channel), the emerging image of Symantec as an holistic information security provider is a bold but logical step forward.
This has also been reflected in the financial markets. In the six months following the huge market slump after 09/11 last year, Symantec's stock doubled from $20.5 to $41.95 in March (including a 2:1 split in January). The market is betting on Symantec being able to deliver on its strategic promises in the long run rather than looking at today's turnover. That's a positive response, but one that risks a painful backfire if Symantec stumbles in execution. The danger is mitigated, of course, by a strong existing line of business in its anti-virus and enterprise security products; the risk is simply one of slower growth, rather than any serious corporate damage. The challenges are numerous, though, not only in internal execution of these goals but also in overcoming pressure from the market. Charles Kology, at IDC, pointed out to the Wall Street Journal that its rivals Check Point and Internet Security Systems have each constructed tight-knit groups of partnerships intended to bring about similarly unified solutions for customers. From competing on point products to competing at a coalition level is unnerving, and often more about relationships than best-of-breed. Symantec's involvement with the channel, relationships with customers and partnerships with other vendors will be a focal point for all concerned going forwards.
Strong growth in most geographies and a steadily-rising stock value has bucked the trend for others in the sector. Although it's true that security companies were hit less badly than other IT vendors, Symantec did particularly well with 2001 revenues of a shade under a billion dollars and revenues for its 2002 financial year ended March 2002 topping the $billion mark for the first time. The downsides on the numbers are declining growth figures for Latin America and for the Enterprise Administration business unit. Everything else is growing strongly, particularly the Enterprise Security business unit, at 29% (at end FY02) The company also has plenty of cash on hand ($1.5b on hand at the end of fiscal year 2002) to further its acquisition strategy, a tactic which is quite likely to develop as the company expands its security-umbrella approach.
Historically, Symantec has been a strongly products-focused company. More recently it has started to investigate managed security services following a groundswell of interest in that market space, but currently reports only 1% of revenue from services.
That's starting to sound not dissimilar to Computer Associates, which painted a similar picture for network management but failed to make as much of a splash as it had hoped. At the same time, the interest in services is more reminiscent of a shadow cast by IBM, a likely proposition given the background of CEO Thompson. The move to central coordination for the
products is far from a new one. Symantec's SystemWorks and SystemCenter
products have offered a unified solution for desktop security and management
to corporate users, as has its Internet Security package for home users. Although not all-inclusive, this is a broad
outline of Symantec's current product lines:
The company's platform focus has
traditionally been targeted at the Wintel environments, with Macintosh
support for seasoning. That's broadened to encompass Linux - such as the
Symantec Enterprise Firewall for IBM eServer iSeries for Linux and its
Enterprise Firewall appliance - and other open systems such as HPUX and
Solaris, as well as venturing into the handheld market with its AntiVirus
2002 for Palm OS.
With a foothold in the appliance market, this is also a strong growth area Symantec is likely to explore further, and many of its products are well suited to a standalone role. Of course, this also opens up avenues for managed services. Reviews of Symantec Products in Secure Computing Magazine:
Symantec, although not as acquisition hungry as some large players tend to be, has had its fair share of mergers and acquisitions since its early days - around 30 since its IPO in 1989. Many of these have been for specific technologies, with a sprinkling of outright customer-base acquisition along the way. The earliest and probably most famous was its purchase of Peter Norton Computing in 1990, the supplier of Norton Utilities - one of the best-known software suites for PCs ever produced. Although that original tool-set has undergone a security refocus, it remains one of the decisive moments in Symantec's history. More recently, the company acquired AXENT at the end of 2000, gaining intrusion detection and firewall products, a lot of expertise and a healthy chunk of market share. Although that acquisition was in keeping with the by then clearly articulated strategy of the company, Symantec's confidence in its ability to integrate the products, deliver an underpinning platform and maintain momentum at the same time put a good message on the table about viability and deliverability. Other acquisitions of note were those of Intel's and IBM's anti-virus businesses in 1998. Although it gained IBM's immune system technology too, those acquisitions brought little else of significance to the table in anti-virus technology (some of which it had already gained from Central Point), but did help leapfrog Symantec into its market position today as a leading anti-virus vendor. Another significant benefit of the IBM alliance was the injection of credibility in the enterprise/corporate market at a time when Symantec was predominantly a consumer software company.
Along the way, Symantec has also divested itself of unnecessary baggage: divisions which no longer suited its security-focused market vision or which it had gained as part of an acquisition. The highly-rated VisualCafé Java development environment, for example, was sold to BEA and Warburg, Pincus when that group purchased Symantec's Internet Tools division for around $75m in cash, and created WebGain as an independent company.
Somewhat surprising was the selling of PassGo. That entity was acquired as part of AXENT, and provided promising single sign-on, authentication and password management tools. Although at first glance that looked like a useful component for Symantec's overall security umbrella, it underwent a management buy-out in 2001 and became a separate company. The agreement was amicable - in the process of divestiture PassGo gained exclusive license to Symantec's Defender, Webthority, PassGo, Privilege Manager for Unix (UPM) and Resource Manager for Unix (URM). Bucking the trend is WinFax, certainly not a security product but one which has remained part of Symantec's consumer desktop offering for many years. White Papers Like other big players in the security arena, Symantec has an important role to play in educating the market about the issues, new threats and trends. The company's Security Response Center (http://securityresponse.symantec.com) has provided information about viruses, hoaxes, security advisories and related issues for years. The company also provides more in-depth whitepapers on general security issues: http://enterprisesecurity.symantec.com/content/featurearticles.cfm Recent articles include:
Corporate
News
A complete listing of Symantec's corporate news and
public statements is available online at: What the analysts are saying Below are a few of the many reports from analysts covering this sector in general, and Symantec in particular. The views therein are not necessarily those of SC On-Line, and some may require purchase and/or registration. More
comments from John Walter Thompson, CEO of Symantec, as part of the
interview with him by SC Magazine. The views expressed in the interview are
not necessarily those of SC Magazine ... View
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Olivia
Golden, of Bear Stearns, is positive about this evolving strategy: "We
think Symantec's strategy could radically change "business as
usual" in the Internet security market. Most corporate customers have
built their Internet security systems by cobbling together disparate
products from various vendors. Due to the lack of interoperability, however,
these solutions have often proved expensive and difficult to manage. We
think Symantec's approach goes to the root of the problem by directly
resolving these key issues." Golden notes that although this is a
"daunting undertaking, if Symantec is able to clear the technological
hurdles required, we think it could emerge as the dominant player in the
enterprise Internet security market."
Until
recently, the company was supporting a broad base of individual product
offerings targeting specific areas and markets. While that remains true, far
more attention is being paid to the role of each product within the bigger
picture of security as painted by Symantec, and going forward the company is
planning to cement that strategy with an overarching framework holding the
whole thing together, a framework which the company says will extend to
other companies' solutions too. The Enterprise Security Manager is a vital
first stage in realizing this goal.
Going
forward, a focus on Microsoft PocketPC platforms is likely to develop as the
handheld market continues to heat up, although there's no clear indication
of that as yet. The obvious products for this space are anti-virus,
pcAnyWhere, and the ProComm terminal emulation package.
Another
example would be ACT!, which although well regarded as a contact management
and CRM platform, didn't make a lot of sense against Symantec's
strengthening Internet security focus. In 2000, that division was sold to
SalesLogix, now Interact Commerce Corporation.