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Cohesity is buying Veritas' data protection business, combining both into a single company operating under the Cohesity name.
The blended company, which holds an estimated combined value of $7 billion, will focus on data security and data management, uniting Cohesity's focus on SaaS applications with Veritas' continued support of protecting on-premises data. It will be led by current Cohesity CEO Sanjay Poonen, with Veritas CEO Greg Hughes serving as a board member and strategic adviser to the CEO, according to a press release.
Veritas' remaining assets and businesses will form a separate company called DataCo. Its offerings will include InfoScale, Data Compliance and Backup Exec, and will function autonomously. DataCo will be led by Lawrence Wong, currently senior vice president of strategy and products at Veritas.
The deal, unanimously approved by the boards of directors at Cohesity and Veritas, is expected to close by the end of 2024, subject to regulatory approval.
Once the deal closes, Cohesity will have a collective 10,000 customers and 3,000 partners, as well as a presence in 96 of the Fortune 100 companies, according to the press release.
The deal is a significant one, according to Brent Ellis, senior analyst at Forrester Research. Acquisitions in the data protection market typically focus on technology components such as Commvault's acquisition of TrapX for ransomware decoys. Or they consist of established players buying startups such as Hewlett Packard Enterprise's acquisition of Zerto for its GreenLake as-a-service portfolio.
This is the first time in recent years that one competitor has bought another outright, likely as both have key capabilities and customers neither could reach alone, he said.
"This is the first recent example of actual competitors buying one another," Ellis said. "They're getting some synchronicity in what they do."
Enterprise upgrade coming
Cohesity said it will follow a "no customer left behind" approach for both Veritas and Cohesity customers, according to its roadmap strategy site.
The catalog of both companies' products will continue to be supported, and customers can choose to migrate to any forthcoming products if and when they see fit.
The future offering from Cohesity will include elements of the Cohesity Data Cloud platform and Veritas NetBackup created by a joint engineering team. Veritas NetBackup appliances and Alta Data Protection, a cloud-native extension of NetBackup, will be part of this product, along with Cohesity's security tool DataHawk and analytics tools Turing and IT Analytics.
The companies expect finalized plans by estimated close of the transaction in late 2024.
SaaS in the data center
Enterprise customers have an array of data protection products, including SaaS services such as Microsoft 365 or data center OSes such as Oracle Solaris, Ellis said. Given the data protection portfolio companies have to build, it's likely that some may already use both vendors.
"I'm willing to bet some of those businesses bought Cohesity and kept Veritas for data center [protection]," Ellis said.
Neither company could make strong headway alone in the combined cloud and on-premises markets, according to Jerome Wendt, an analyst and CEO of Data Center Intelligence Group.
Jerome WendtAnalyst and CEO, Data Center Intelligence Group
"I think it was driven out of necessity by both companies," Wendt said. "The smaller dog is eating the bigger dog in this case."
Cohesity, founded in 2013, has focused on protecting cloud and SaaS workloads while integrating new technologies, such as a generative AI assistant, Wendt said. Veritas, by contrast, was founded in 1983 and, while dabbling with newer capabilities, continues to support a significant number of on-premises customers who use its software for still-vital workloads. But Veritas seemed to understand it needed to adapt to the changing times, having acquired HubStor for SaaS protection in 2021.
"Veritas has tried to keep pace with these things, but how do you do that in a mission-critical environment with [customers] that abhor change," Wendt said.
Despite marketing assurances of "no customer left behind," both Ellis and Wendt said customers should anticipate changes to their contracts requiring a move to SaaS subscription over perpetual licenses.
Veritas has customers running older versions of NetBackup on premises with a perpetual license, Ellis said. Those customers should anticipate needing to make a shift sooner rather than later.
"Eventually, they're going to get to a point where it's not cost effective to support these old workloads," Ellis said.
Wendt said Cohesity's customers are already used to the "pay-as-you-go" model, and Veritas customers should similarly anticipate needing to adopt the model. The promise of a faster update cadence and new protection features should outweigh any cost increases or setup headaches, he added.
"If I'm a [customer], I'm getting ready for subscription pricing," Wendt said.
Updated following initial publication.
Tim McCarthy is a journalist from the Merrimack Valley of Massachusetts. He covers cloud and data storage news.