The implications of the Cohesity-Veritas deal for the future of data security and management

Question:

What is your professional opinion on the recent acquisition of Veritas’ data protection unit by Cohesity, a SoftBank-backed data security software firm, in a deal that values the combined entity at $7 billion?

Answer:

The recent announcement of Cohesity’s acquisition of Veritas’ data protection unit has sent shockwaves across the data security and management industry. The deal, which values the combined entity at $7 billion, is one of the largest and most strategic in the history of the sector. But what does it mean for the customers, partners, and competitors of the two companies? And what are the implications for the future of data security and management?

Cohesity and Veritas are both well-established players in the data protection market, offering solutions for backup, recovery, archiving, and disaster recovery. However, they have different strengths and focuses. Cohesity, which is backed by SoftBank Group, has been a pioneer in the hyperconverged secondary storage space, providing a platform that consolidates data silos and simplifies data management across cloud, edge, and on-premises environments. Cohesity also leverages artificial intelligence (AI) to enhance data security, optimize performance, and generate insights from data. Veritas, on the other hand, has a strong legacy in the enterprise segment, serving 96 of the Fortune 100 and 80% of the Global 500 with its flagship product NetBackup, as well as other offerings such as NetBackup appliances, Alta, and Aptare.

By combining their assets and expertise, Cohesity and Veritas aim to create a new leader in data security and management, with a comprehensive portfolio of products and services that can address the needs of customers of all sizes and industries. The joint company will have a pro forma annual revenue of $1.6 billion and annual recurring revenue of $1.3 billion, as well as a global footprint of over 10,000 customers and hundreds of exabytes of data protected. The joint company will also benefit from the scaled R&D investment and accelerated product innovation that the deal will enable, as well as the extensive partner ecosystem that both companies have built over the years.

According to Sanjay Poonen, the CEO and president of the joint company, the deal is driven by the vision of creating a “Snowflake-meets-Palo Alto Networks-type of opportunity” for data security and management, referring to two of the most successful and disruptive companies in the cloud and cybersecurity domains. Poonen, who joined Cohesity in 2023 after serving as the chief operating officer of VMware, said that the deal will allow the joint company to address the top imperatives of IT and business leaders: protecting data from ransomware and other threats, and gaining insights from data to drive efficiency, innovation, and growth.

The deal is also expected to create value for the partners of both companies, who will have access to a broader and deeper portfolio of solutions, as well as more opportunities to cross-sell and upsell to their customers. Poonen said that the joint company will continue to invest in and support the channel, which he described as “the lifeblood of our business”. He also assured that the joint company will honor the existing commitments and roadmaps of both Cohesity and Veritas products, while working towards the delivery of an integrated solution that combines the best technology across the two companies.

However, the deal is not without its challenges and risks. The integration of two large and complex organizations, with different cultures, histories, and customer bases, is not an easy task, and may take time and resources to execute successfully. The deal may also face regulatory hurdles, as it will reduce the number of major players in the data protection market, and potentially raise antitrust concerns. Moreover, the deal may trigger a competitive response from other data security and management vendors, such as Dell EMC, Rubrik, Veeam, Commvault, and Druva, who may seek to capitalize on the uncertainty and disruption that the deal may cause in the market.

In conclusion, the acquisition of Veritas’ data protection unit by Cohesity is a bold and ambitious move that will reshape the landscape of the data security and management industry. The deal will create a new leader in the sector, with a compelling value proposition for customers and partners, as well as a strong vision for the future of data security and management. However, the deal also entails significant challenges and risks, and will require careful and effective execution to realize its full potential.

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