Symantec, Huawei form joint storage, security company

Symantec announced yesterday that it has formed a joint venture with storage and networking hardware company Huawei and indicated jointly developed products are coming to the U.S.

After having denied rumors of a partnership with Huawei, a Chinese storage and networking hardware company, Symantec Corp. announced yesterday that the two companies have indeed formed a joint venture that will combine Symantec's storage and security software with Huawei's hardware for products to be marketed first in Asia and then in the U.S..

According to Kris Hagerman, president of Symantec, the venture will be headquartered in Chengdu, China, and Symantec will contribute $150 million, or a 49% stake in the new company. Symantec will also be contributing engineering and product development staff to the new joint company, but Hagerman declined to say how many staff Symantec will contribute, or whether they will be taken from U.S. departments or be newly hired. Hagerman said there will be no members of senior Symantec management leaving to join Huawei-Symantec.

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Symantec chose to partner with Huawei because it is one of the last remaining pure hardware plays that will not compete with Symantec's focus in software. Joint products will be developed for, but not limited to, the Asia-Pacific (APAC) market. Both companies are too big to acquire each other outright, Hagerman said.

Symantec is remaining mum on exactly what type of joint products will come out of the deal, but said they will appear in the next year. "If you think about a lot of disk technologies and our core products, like [Veritas] Volume Manager, you can imagine delivering a number of products," Hagerman said.

The focus of joint products will be on storage and security; Hagerman said Huawei-Symantec does not plan a relationship with Huawei's other joint venture with networking company 3Com, known as H3C Technologies Co. Ltd.

"It seems like Symantec is testing the waters here," said Arun Taneja, founder and consulting analyst with the Taneja Group. "$150 million is not a lot for them."

Still, Taneja said, depending on how far the investment goes, it could amount to a dramatic shift in Symantec's "no hardware agenda" strategy.

More likely, however, the partnership will allow Symantec to develop products tactically in response to markets like storage encryption where it doesn't have a play without hardware. "You can't get away with running encryption in software anymore because the performance impact is too large," Taneja said. "We all know that, Symantec knows that, but they don't have a play there as a software-only company. And if they don't have a play there, they can't play in key management, which is an even larger, more strategic opportunity."

Huawei's partnerships, growing by the month, with iSCSI storage area network (SAN) companies (current partners include iVivity and Intransa Inc.) could also signal another area of potential development between the two companies, Taneja said. "APAC markets are much more price sensitive than the U.S., and iSCSI has much more appeal there." However, Huawei has been the polar opposite of Symantec there, with its focus almost entirely on hardware.

"Each company can continue to play to its strengths in that way, but access new markets through this partnership," Taneja said. "I will be interested to see how far it goes, how much of a strategic shift this will be for Symantec -- right now, no one has enough information to make a full assessment yet."

According to Brian Babineau, analyst with the Enterprise Strategy Group, Huawei's presence as a player in the Asian telecom market could also be a strategic play for Symantec in several areas. "Symantec and McAfee battle it out in that space on the security side," he said. "And developing software as a service with a telcom focus may develop into next-generation services that can then be extended to other parts of the world."

Babineau also pointed out that with 51% ownership from Huawei, the joint venture is officially designated a Chinese company, which could also be a reason for the move by Symantec. "Everyone's trying to get into emerging markets like China -- this was a very smart way for Symantec to do it."

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