Hewlett-Packard Co’s acquisition of Symantec’s Network Business Unit looked at first to be a big plus for both parties. Symantec users looked set to benefit from Hewlett-Packard’s likely increased level of investment in the Norton product line – something Symantec had failed to provide. The deal also appeared to underline Hewlett-Packard’s commitment to quickly providing users of its OpenView DSM distributed systems management offering with an integrated desktop management suite, so providing them with an end-to-end systems/network management product. With the acquisition of these products and a third, Network Desktop Administrator, Hewlett-Packard has promised to fully integrate the desktop management toolset with OpenView. It now looks as though users of the Symantec desktop management products are likely to be in a weaker position as a result of the deal and that OpenView users will have to wait considerably longer than first thought to see an integrated end-to-end systems/network management product. The acquired Network Business Unit product set comprises: Norton Administrator for Networks NAN – for hardware and software inventory, software distribution and software metering; Norton Desktop Administrator NDA – for controlling user access to specific applications; and Expose – server management software for mixed network operating systems environments comprising NetWare, Windows NT, Vines and also SNMP- based devices. Following the sale, existing users of the desktop management toolset now find themselves having made an investment in a product set with a limited future as standalone products. The long term future of the Norton product line now looks uncertain. While officially Hewlett-Packard has said it will continue to support the three products it bought with the acquisition of Symantec’s Network Business Unit, the products are unlikely to remain in their current form for more than two years.
By Krishna Roy
Instead they will be subsumed into OpenView as part of Hewlett- Packard’s all-encompassing systems/network management strategy. Furthermore, if NT does become the standard desktop platform adopted by corporates, NDA will cease to exist in its present format as it is not designed to manage NT desktops. In addition, users also have a product line still lacking in scalability. Symantec claims that some users use the desktop management products to manage tens of thousands of desktops but this number looks highly dubious. The products have a back-end which is built on a proprietary flat file architecture which means they can support only a few thousand desktops before becoming creaky. Most corporates use the software to support no more than 1,500 to 2,000 desktops. Not only will Hewlett-Packard have to re-write the NAN, NDA, and Expose code to make the desktop management products scalable but it also has some way to go before OpenView, itself, has a level of scalability that will put it on par with Sun Solstice, Cabletron Spectrum or IBM NetView 6000. The problem with OpenView lies in the underlying Network Node Manager technology on which it is based. It has a centralized control architecture which limits the platform’s scalability to roughly 2,000 nodes and restricts its flexibility for network administrators who want to manage anything from anywhere. Hewlett-Packard has set a deadline of the second half of 1997 for the first stage of integration between OpenView, NAN, NDA and Expose. Reticent to explain in detail the exact nature of the integration plans, Hewlett-Packard has simply said that the desktop management packages would be more closely linked than the application programming interface level available currently.
Significant enhancements
Eventually, new versions of all three products with ‘some significant enhancements’ will ship under the OpenView brand, the company told M&A Impact. The eventual aim is to enable data sharing between the three applications and OpenView through a joint repository. At a product support and sales level Symantec will handle the development, marketing and support of NAN, NDA and Expose until new versions are due for release during the second half of 1997. This gives Hewlett-Packard roughly 4 to 6 months to ensure that existing Symantec users receive a consistent level of support through the product changeover period. The integration of the former Symantec desktop administration products into OpenView raises fresh concerns for those users currently running Microsoft Corp’s SMS Systems Management Server as a desktop management platform in conjunction with OpenView. Hewlett-Packard signed a licensing agreement with Microsoft in September 1996 to provide management of desktop and NT environments through integration of SMS with IT/Administration – a combination of OpenView AdminCenter and OpenView Network Node Manager and IT/Operations. SMS offers features that are almost functionally identical to those provided by the Symantec tools and continuation of current integration work between the SMS product set and Hewlett-Packard OpenView looks highly unlikely now that Hewlett-Packard plans to use its acquired toolset in place of IT/Administrator and IT/Operations. The number of users affected is not high but SMS/OpenView users will want to seek assurances that they will not be left out in the cold. When the deal was announced, in February 1997, it failed to raise even an eyebrow among Wall Street traders and Hewlett-Packard’s share price hovered around the $59 market, $1 shy of its 52-week high.
Failure to react
Wall Street’s failure to react may be due to the fact that the Symantec Network Business Unit had been up for sale since November 1996 and Hewlett-Packard’s announcement that it would be the purchaser was somewhat of a foregone conclusion as it was the only large customer Symantec had for the Norton products. Under the terms of the deal, Hewlett-Packard will pay Symantec around $30m over the next two years based on sales and it is likely that it will see sufficient revenues from the products within this period to see an adequate return on investment – Symantec saw $20m in revenues last year from the three products. Symantec took a one time charge of $10m for lost business against fourth quarter 1996 results. However, Hewlett-Packard bought a somewhat depleted team of Symantec employees which may be a cause for concern. Several key executives left the company in November 1996 to join rival upstart, Cybermedia. But the company will need to fill this gap in management expertise in order that the 85-strong group remains focused on its sales and development efforts under new ownership. If the group fails to remain cohesive and motivated, Hewlett-Packard could be in danger of not meeting the $10m sales target it has set for this fiscal year. The Symantec business will operate as a new unit within Hewlett-Packard’s Network and Systems Management division and will stay in Santa Monica, California. Hewlett-Packard is working hard to provide OpenView users with a scalable distributed system environment and the acquisition of Symantec’s desktop administration products is one of its latest efforts in this direction. Even though other platforms have much to offer OpenView remains the industry’s DSM platform of choice. For Hewlett-Packard to remain in this position it must move quickly to address the scalability issues. If it is successful users will see a more comprehensive network and systems management suite in OpenView.
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This article is taken from the May edition of M&A Impact, a sister publication.
