The current flurry of breakups in the tech sector is gratifying to watch. The only conglomerate strategy I have ever seen work effectively is Alfred P. Sloan’s revolutionary “centralized decentralization” which allowed General Motors to become the dominant car manufacturer for decades. Roger Smith, the epitome green-visor accounting executive, destroyed that company by re-centralizing the divisions.
HP announced a split this week. In the fast moving PC world innovation and focus are required.
In the security industry I would maintain that there are no business strategies that justify combined operations of security and non-security businesses. The primary example of this is the combination of security business units with data center storage solutions.
Yes of course, data storage solutions have to be secured and companies like Veritas (acquired by Symantec in 2004) and EMC have to provide encryption, key management, redundancy, and database firewalling, as part of their core offerings. But there is no justification for a security conglomerate like Symantec to also compete in the data center world.
EMC, through its acquisitions of several leading security solutions, has kept the two business operations separate and maintained the brand of RSA Security. Alfred Sloan would be pleased with EMC’s model.
So yesterday’s announcement that Symantec was finally orchestrating a divorce was welcomed by many. You may recall my words of March 24, 2014:
“Symantec should reverse the merger with Veritas that cost $13.5 billion in 2004. Security is not like other market segments. The space is constantly evolving because it has a driver that only Aerospace and Defense shares: threat actors. Being one-half data center software company and one-half desktop anti-virus company makes no sense at all. Split off the data center business and let the two halves thrive.”
Luckily, it is easy to split up security products from data center products. Some sales teams and partner arrangements may be the messiest component.
Now it is time for Intel to seriously address the inevitability of spinning off its McAfee division (now called Intel Security). A stand-alone Symantec security company is going to be a strong competitor. The sooner McAfee is freed from the illogical binding to a chip foundry the sooner it can get back down to the business of securing its customers.