Veritas says SANs are still experimental |
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By the451.com, Special to searchStorage
19 Jul 2001 | the451.com |
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Despite the amount of publicity the storage area
network (SAN) phenomenon has attracted over the last
couple of years, businesses are still predominantly at an
experimental stage in terms of adoption, according to
Veritas Software CEO Gary Bloom. That said, the storage
software giant isn't downbeat; it believes the need for
software that helps increase the utilization of an
organization's storage hardware has never been greater, a
fact reflected in its relatively upbeat second-quarter
earnings.
Bloom said the technical challenge of integrating both
network and storage infrastructures in the form of a SAN
is currently leading to experimental implementations,
where businesses configure just a small piece of their
storage architecture as a SAN. He stressed, however, that
SANs are on a normal adoption curve for a new technology,
and was not unduly concerned about slow adoption.
Meanwhile, Veritas has plenty of meat-and-potatoes
products to rely on before SAN spending starts to kick
in, and Bloom highlighted that the transition of storage
value from hardware to software continues to keep the
vendor at the top of the storage heap in these tough
times.
More specifically, Veritas contends companies don't
want to buy any more storage hardware and are instead
looking to software that helps them use what they have
more efficiently in order to keep costs under control.
Analysts' estimates of storage utilization rates vary,
but some put it as low as 35%, with most agreeing that it
is currently under 50%. Bloom said Veritas' software
could help increase this to 60-70%, or even over 90% in a
SAN configuration.
That's the main reason why Veritas continues to shine
in a sector that it experiencing what the doldrums feel
like for the first time, said Bloom. Although the company
lowered its guidance for the year, and now expects
revenue growth in the 25-35% range rather than the
previously lowered 35-50%, most investment analysts are
happy that Veritas is well positioned in a tough market,
poised to achieve even greater things whenever the
economy decides to pick up. For the second quarter,
Veritas recorded revenue of $390.1m, with operating
earnings per share of $0.19, right on the nose of
consensus estimates.
Aside from the increased urgency among companies to
spend more on storage software, Bloom highlighted greater
penetration of key accounts, strong growth in government
business, a healthy replacement level of competitors
Computer Associates and Legato, and strong growth of
"strategic" consulting as additional plus points.
Challenges continue to be the postponement of deals
(although not their cancellation, thus far), reduced
order size, a fall in OEM revenues due to sluggish server
sales at the major vendors, and lower sales to dotcoms
and various kinds of service providers.
Veritas' international performance continues to be a
double-edged sword. Although analysts patted the company
on the back for increasing international revenue by 67%
from the year-ago period, to $110m, some cautioned that
the US economic malaise might spread to Europe before the
US recovers. That said, Bloom was confident that Europe
in particular looks strong, because companies there are
beginning to adopt products other than backup and
restore, such as clustering, replication and SAN
management.
Even so, the fact that Veritas revised guidance for
the year two weeks into the third quarter -- historically
the weakest internationally as Europe goes on holiday --
suggests the company is seeing no letup in the spending
environment.
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