Kacin Point: Altiris shareholders win; customers pay the price

As a company that competes with Altiris (ALTRS: www.altiris.com), we at KACE (www.kace.com) have been following the rumors that Altiris has been shopping itself for over a year. We first heard the rumor during the summer of 2005 and the rumor mill has been consistent on the topic since then. Altiris has enjoyed a huge stock run-up in recent months jumping from about $16 in July to over $32 today presumably on acquisition rumors and one key partnership announcement – so shareholders ought to be pleased.

Unfortunately for Altiris customers and Symantec (SYMC: www.symantec.com) shareholders, this marriage was not made in heaven.

(see the press release)

So what’s the good, the bad and the ugly of this deal?

The Good: Security and Systems Management Together

The central message and rationale for this combination is that security and systems management go hand-in-hand from the customers’ perspective. We agree that good systems management practices are a cornerstone to any reasonable security strategy. We would even argue that Systems Management is the umbrella underneath which security ought to be rightfully managed. So, Symantec, congratulations on a bold move!
The Bad: Product Overlap and Integration Challenges

While there are some product synergies in this deal, there are also some areas of potential conflict. For example, both Altiris and Symantec have been at one another’s throats regarding Imaging and Systems Deployment capabilities. Ghost is Symantec’s main play in this space and Altiris has their own technology and the two have been in a patent feud for some time. Will these two now become one? And, what of Symantec’s Policy Management and Compliance Management capabilities… how will they mix with Altiris’ solutions in this space? My guess is that the center of gravity from a development perspective will remain with Symantec and, therefore, the Altiris installed base will be adapt to these changes or look for other solutions.
The Ugly: Symantec is Embattled and Has a History of Failed Acquisitions

Most pundits agree that Symantec is in a world of hurt. Microsoft is going right after their core business with their Vista platform (adding more core security capabilities) and, to make matters worse, Symantec has suffered recent earnings misses. All of this on top of continued accusations that they’ve failed to properly integrate and capitalize on both large and small acquisitions in the past (e.g., Veritas, ON Technology, Sygate). If Symantec fails again, it will come at a high price to Altiris customers who have spent close to a billion dollars deploying Altiris solutions into their companies.
The Good (for KACE): Jekyll & Hyde Meets the Mid-market

Altiris likes to talk about its position in the mid-sized enterprise, but the reality is that they’ve buttered their bread in the enterprise space. Symantec suffers a split personality with extensive support for individual consumer customers and the enterprise; yet, they’ve failed to develop strong products for the Fortune 100,000 (the 100,000 companies that fall just outside the Fortune 1000). To be clear, Symantec has large market share in all segments. The question is whether or not they can deliver systems management products into this important mid-market segment. We think not.

What the mid-market really cares about is ease-of-use, good value and a complete solution. These are three things that Symantec/Altiris cannot deliver given all of the challenges outlined above and it seems clear that they will not for a very long time. And, these are three things that create an open playing-field for companies like KACE.

Raising the awareness that Systems Management is core to any security is a good thing. And, we believe, end-point systems management will drive the systems management and security markets for years. Will Symantec be able to put the pieces together and emerge with a suite of market leading products? We don’t think so.

If you’re interested in what others think about this topic, one interesting blog from Alan Shimel sums up the opinions of several others.

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