Veritas acquisition adds e-mail archiving

Posted on October 01, 2004

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BY SONIA R. LELII

Veritas' recent $225 million acquisition of UK-based KVS Inc. fills a hole in Veritas' e-mail archiving product line, say analysts.

With the acquisition, Veritas acquires KVS's flagship Enterprise Vault software along with KVS's 900-customer installed base. Veritas is phasing out its own Data Lifecycle Manager software and will replace it with Enterprise Vault. Veritas executives estimate that Data Lifecycle Manager is used by 100 to 150 customers.

"We will support Data Lifecyle Manager for two more years," says Brenda Zawatski, vice president of product marketing at Veritas. "Most customers on maintenance contracts will get a KVS upgrade for free."

In late August, Veritas CEO Gary Bloom said KVS will operate as a Veritas business unit and that KVS's approximately 200 employees will be retained in the UK under KVS CEO Mike Hedger. Veritas executives identified KVS as the leader with a 36% market sharein the e-mail management and archiving market.

KVS generated $23 million in revenue last year, but Bloom declined to give guidance on revenue figures for 2004. Analysts, however, say KVS is on pace to record revenues between $45 million and $50 million in 2004.

About 20% to 25% of KVS's business is on EMC's Centera product, which is an object-based storage system for reference data. Hedger identified KVS as the "number-one" partner for the Centera platform. EMC and Veritas are strong rivals in the overall storage management software market. EMC's Legato E-Mail Extender and Disk Extender compete against KVS in the e-mail archiving and management space.

Veritas released version 5.0 of its Data Lifecycle Manager software earlier this year, but executives acknowledge that DLM is not as robust as KVS's flagship product, which is firmly entrenched in Microsoft Exchange as well as SharePoint and Microsoft Office environments.

Zawatski says analysts expect the e-mail archiving market to grow at about a 60% compound annual growth rate over the next few years, mainly due to the numerous regulatory compliance laws that are forcing companies to retain records for longer periods of time. "It's a fast growing market," says Zawatski, "and in this case time to market was critical."

Enterprise Vault allows customers to streamline and reduce the ongoing cost of information storage while keeping archived data accessible. Enterprise Vaults works as the core policy engine and data mover, while disk accelerator and compliance accelerator options let users view the data repository to manage and access the stored data, according to Jeff Lundberg, senior product marketing manager at Veritas.


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