Monday, July 21, 2003

Community

EMC partners stand to benefit from Legato buy

By Elizabeth Dinan

When EMC agreed to purchase Legato Systems Inc. on July 8 for $1.3 billion, industry watchers said Legato's software, primarily NetWorker, would broaden the storage hardware giant's repertoire.

And while analysts generally agree the deal will be a win for the Hopkinton-based storage powerhouse, EMC's partners say they anticipate opportunities arising from the deal as well.

Lowell's Storigen entered into an OEM agreement with EMC in April, initiating EMC sales of Storigen's patent-pending Centera Application Gateway (CAG) as an add-on to EMC's Centera Content Addressed Storage Platform. The agreement also allows EMC to resell Storigen's entire product line.

Dennis Hoffman, founder, president and CEO of Storigen, said the merger "presents an additional opportunity for Storigen to extend its relationship with EMC."

Hoffman also believes EMC's acquisition of Legato strengthens EMC's "strategic position and sales footprint for storage software," a move, he feels will benefit his own company.

"With Legato's more than 400 resellers, EMC will be able to provide even more leverage when selling solutions like Storigen's," he said. "As a result, Storigen will benefit from Legato's strong channel relationships and knowledge of software sales."

Storigen's CEO also sees opportunities for his company to "extend its relationship with EMC." Prior to the acquisition, Storigen and Legato were dis- cussing the integration of Legato's Networker backup-and-restore products with Storigen's distributed storage network. The Legato-EMC marriage presents Storigen with the opportunity to "strengthen an already deep technology partnership," he said.

Cambridge Computer has been a Legato business partner for more than a decade, selling Legato products, while Legato outsourced CC's professional services, including integration, systems engineering, course development and classroom instruction, to other resellers.

Jacob Farmer, Cambridge Computer's chief technology officer, says, "right now, all we see is the silver lining."

"We believe that our company has a unique set of skills and resources that the newly energized Legato will want to tap into all the more. Sure, the makeup of the services that we provide back to Legato might change, but the overall demand will probably increase," he said.

"For instance, EMC might build up its own professional services staff, which might in turn take away revenue from Cambridge. However, odds are they will want to tap us to train their people and be around in a pinch. We're happy to take a smaller piece as long as it's a bigger pie, and who knows, maybe we will end up with a bigger piece of a bigger pie."

Farmer said EMC will need to tap into Legato's existing channels, at least for the first few years. The leading channel players have years of collective knowledge and experience that EMC will need in order to tackle the largest and most complex jobs, he theorizes. EMC will also want to maintain channel relationships in order to tackle the small and midsize data centers, he said, adding that his company is "uniquely suited for those installations. "

"The EMC acquisition should be good for sales of Legato products, which in turn should increase demand for Cambridge's services," Farmer said. "Legato is best known for its NetWorker backup software, but the truth is that they have a very broad range of technologies that are equally powerful and innovative - just not as well-known. With EMC's resources behind them, these products could become very successful, particularly Legato's e-mail storage management and compliance management products."

On July 16, EMC posted better-than-anticipated second-quarter profits of $82 million, or 4 cents a share, after earning $1 million, or zero cents a share for the same period a year ago. Revenue for the second quarter this year was $1.48 billion, up from $1.39 billion for the second quarter last year.

In what appears to be a growth mode, EMC in late April acquired Astrum Software, a supplier of storage resource management software designed for the mid-market. Astrum founder Robert Infantino declined to publicly name the price for his company, which included 30 employees and his portfolio of storage management software. Astrum closed up shop at Charlestown's Schrafft Center and moved to EMC's Kendall Square location.