Broadcom-Symantec Deal: 7 Things to Watch
August 9, 2019
Broadcom acquisition of Symantec’s enterprise business will reshape the security market and channel
Channelnomics Staff![]()
Now that the Broadcom acquisition of Symantec – or at least a big chunk of it – has come to pass, it’s time to look at what the deal means for the security industry and channel. There’s no denying that the deal will reshape both as Broadcom wades into the market with significant assets and a recognized brand acquired from Symantec. Just how will the deal reshape the market? The following are seven things to watch as the Broadcom-Symantec deal unfolds.
1. Symantec is a stronger consumer company
Let’s face it: Symantec was always a stronger consumer company. While it invested heavily in enterprise products and services over the years, Symantec still earned its money on consumer and lightweight SMB products. In its most recent financial earnings statement, Symantec said the consumer business generated 90% of its earnings. In the first quarter of Symantec’s fiscal year, the enterprise business generated $611 revenue with margins of 7% compared to the consumer unit’s revenue of $636 million with margins of 53%. The consumer-oriented Symantec will emerge as a much stronger company as a result of shedding its enterprise unit.
2. Name change
An accessory that comes with all the products Broadcom picked up is the Symantec name. If what Broadcom has done with its CA Technologies purchase is any indication, Broadcom will likely continue to market Symantec products under the yellow moniker. The lingering question: How will the original Symantec brand itself? The company didn’t say specifically in its announcement, but indicators point to a revival of the Norton brand. Symantec made several references to its Norton LifeLock consumer brands, and Norton is a strong brand in consumer circles. Chances are that the new consumer-oriented company will emerge as Norton or Norton LifeLock.
3. Shedding of Symantec assets by Broadcom
While Broadcom is growing rapidly through a series of acquisitions, its strategy isn’t to swallow whole all of the companies that it acquires. When Broadcom acquired networking vendor Brocade in 2017, it jettisoned the Ruckus wireless business to Arris International. When Broadcom bought CA Technologies in 2018 for $18 billion, it spun off Veracode as a separate business. Chances are that Broadcom doesn’t want all of Symantec’s enterprise business and will look to sell technologies that don’t complement its existing products or business models. Watch for Broadcom to divest or spin out products such as Symantec’s managed services or data loss prevention products.
4. Conflicted channels
Broadcom is inheriting many of the biggest and best partners through the enterprise acquisition, but that won’t mean Broadcom is getting a productive channel. Broadcom’s strategy is to bundle and push complementary products across its portfolio. While that strategy works for companies like Cisco that have product breadth and depth, Broadcom’s portfolio is incomplete. Symantec partners will likely want a more agnostic go-to-market model that enables them to work across complementary vendors.
5. Channel confusion
Symantec has one of the largest and most diverse partner networks in the business. Untangling the Symantec channel to move with Broadcom won’t happen easily. Many Symantec partners will become divided as they’ll have to stick with both companies to satisfy their diverse customer bases. Chances are Broadcom will leave the inherited Symantec channel alone – from a program perspective – for the foreseeable future until it can figure out how to work with the acquired channel partners. While the status quo is good, it will leave partners wondering what will come next.
6. Competitive pressure
Part of the reason Symantec fell into dire straits is competitive pressure. Symantec, like legacy security vendors such as McAfee, is struggling to maintain its appeal amid upstart challengers such as CrowdStrike, Carbon Black, and Cylance (which was acquired by Blackberry). Moreover, Symantec was facing increasing erosion of its core endpoint protection as companies like Microsoft started offering lower cost and free “just as good” products. As Broadcom and Symantec work through the regulatory review process, watch competitors – particularly the newer rivals – swoop in to disrupt the existing business and lure partners away from the new companies.
7. Similar deals
Over the years, the market speculated about the possibility of mega-security deals that would nest a data protection company inside a larger mainstream company. Before Intel bought McAfee in 2011, many people speculated that the security company would fall under Cisco or Microsoft. Even as the Symantec deal with Broadcom unfolded, several analysts and market watchers wondered if Cisco, Hewlett-Packard, or Microsoft would buy one of the larger security vendors to capitalize on the continued demand for data protection. The Broadcom deal will likely rekindle exploration of similar deals and could prompt a move by a major infrastructure vendor before the end of the year.
1. Symantec is a stronger consumer company
Let’s face it: Symantec was always a stronger consumer company. While it invested heavily in enterprise products and services over the years, Symantec still earned its money on consumer and lightweight SMB products. In its most recent financial earnings statement, Symantec said the consumer business generated 90% of its earnings. In the first quarter of Symantec’s fiscal year, the enterprise business generated $611 revenue with margins of 7% compared to the consumer unit’s revenue of $636 million with margins of 53%. The consumer-oriented Symantec will emerge as a much stronger company as a result of shedding its enterprise unit.
2. Name change
An accessory that comes with all the products Broadcom picked up is the Symantec name. If what Broadcom has done with its CA Technologies purchase is any indication, Broadcom will likely continue to market Symantec products under the yellow moniker. The lingering question: How will the original Symantec brand itself? The company didn’t say specifically in its announcement, but indicators point to a revival of the Norton brand. Symantec made several references to its Norton LifeLock consumer brands, and Norton is a strong brand in consumer circles. Chances are that the new consumer-oriented company will emerge as Norton or Norton LifeLock.
3. Shedding of Symantec assets by Broadcom
While Broadcom is growing rapidly through a series of acquisitions, its strategy isn’t to swallow whole all of the companies that it acquires. When Broadcom acquired networking vendor Brocade in 2017, it jettisoned the Ruckus wireless business to Arris International. When Broadcom bought CA Technologies in 2018 for $18 billion, it spun off Veracode as a separate business. Chances are that Broadcom doesn’t want all of Symantec’s enterprise business and will look to sell technologies that don’t complement its existing products or business models. Watch for Broadcom to divest or spin out products such as Symantec’s managed services or data loss prevention products.
4. Conflicted channels
Broadcom is inheriting many of the biggest and best partners through the enterprise acquisition, but that won’t mean Broadcom is getting a productive channel. Broadcom’s strategy is to bundle and push complementary products across its portfolio. While that strategy works for companies like Cisco that have product breadth and depth, Broadcom’s portfolio is incomplete. Symantec partners will likely want a more agnostic go-to-market model that enables them to work across complementary vendors.
5. Channel confusion
Symantec has one of the largest and most diverse partner networks in the business. Untangling the Symantec channel to move with Broadcom won’t happen easily. Many Symantec partners will become divided as they’ll have to stick with both companies to satisfy their diverse customer bases. Chances are Broadcom will leave the inherited Symantec channel alone – from a program perspective – for the foreseeable future until it can figure out how to work with the acquired channel partners. While the status quo is good, it will leave partners wondering what will come next.
6. Competitive pressure
Part of the reason Symantec fell into dire straits is competitive pressure. Symantec, like legacy security vendors such as McAfee, is struggling to maintain its appeal amid upstart challengers such as CrowdStrike, Carbon Black, and Cylance (which was acquired by Blackberry). Moreover, Symantec was facing increasing erosion of its core endpoint protection as companies like Microsoft started offering lower cost and free “just as good” products. As Broadcom and Symantec work through the regulatory review process, watch competitors – particularly the newer rivals – swoop in to disrupt the existing business and lure partners away from the new companies.
7. Similar deals
Over the years, the market speculated about the possibility of mega-security deals that would nest a data protection company inside a larger mainstream company. Before Intel bought McAfee in 2011, many people speculated that the security company would fall under Cisco or Microsoft. Even as the Symantec deal with Broadcom unfolded, several analysts and market watchers wondered if Cisco, Hewlett-Packard, or Microsoft would buy one of the larger security vendors to capitalize on the continued demand for data protection. The Broadcom deal will likely rekindle exploration of similar deals and could prompt a move by a major infrastructure vendor before the end of the year.
