Broadcom announced plans to acquire Symantec Corporation's enterprise security business for $10.7 billion in cash, last week.
The move comes one-year after Broadcom agreed to pay $18.9 billion in cash for IT solutions provider CA Technologies.
The deals highlight more than a year of large-scale acquisitions and consolidation in the software delivery market. Last year, IBM purchased RedHat for $34 billion and Microsoft bought GitHub for $7.5 billion. The trend hasn't slowed.
The acquisitions of CA Technologies and Symantec are a far cry from Broadcom's semiconductor design and manufacturing roots, a pivot to a software-defined future.
Enterprise spend is no longer going toward hardware, save for companies operating data centers. Businesses are spending IT dollars on software and services, said John Parkinson, partner and managing director of Parkwood Advisors, in an interview with CIO Dive.
When looking at the market, Broadcom can't afford to purchase companies like IBM or Microsoft with broad portfolios. It can, however, construct its own, piecing together and integrating diverse software portfolios.
Broadcom is purchasing companies with rich, deep histories in writing enterprise-class software, said Chris Gardner, principal analyst, infrastructure and operations at Forrester.
It doesn't only want to be a hardware company, he said. Besides, software margins are better than hardware margins.
Software, a future
Is purchasing Symantec a strong addition to Broadcom's portfolio? Depends on who you ask.
The "jury's kind of out," said Gardner. Symantec has a gigantic "black book" of enterprise clients and strong branding, which Broadcom can leverage.
Gartner, in turn, is "not negative on the acquisition," Lawrence Pingree, VP analyst at Gartner, told CIO Dive.
It's also a lesson in bundling. Broadcom can use CA's portfolio to grow Symantec's customer base, according to Parkinson, making it cheaper to buy software services altogether.
Symantec brings a diverse product portfolio, but Broadcom will have to hasten product rationalization.
Purchasing CA was a smart move for Broadcom because of its specialization in automation software, which is a huge market right now, according to Gardner. But some of the enterprise solutions in Symantec's portfolio are facing stiff vendor competition.
Pure-play security vendors, including McAfee and Kaspersky Lab, and end-to-end providers, such as Microsoft, already compete head-to-head with Symantec product lines, challenging product areas like endpoint protection and data loss prevention.
Cloud service providers also pose a threat to market areas like identity and access management and vulnerability assessment, as customers look for solutions bundled into other offerings.
Symantec has made a lot of "good, long-term, strategic bets and acquisitions," said Pingree. But "the future isn't always here right now."
With Symantec's "huge portfolio" — grounded in enterprise and consumer security — it's difficult for salespeople to focus and grow the business, according to Pingree. The company's marketing function also lagged, bifurcating across brands rather than operating under unified messaging.
Broadcom will now weave Symantec's enterprise business into its already expansive portfolio, as it makes the transition from a hardware- to a software-focused provider.
The company does not, however, have anything on the development side of the house, which could be a smart play moving forward.
There are plenty of medium-sized players with offerings in the DevOps or continuous integration and continuous delivery (CI/CD), which would round out Broadcom's portfolio, according to Parkinson.
Future portfolio decisions depend on where Broadcom wants to take its business.
If Broadcom bought Symantec merely for the branding and as a means to capitalize on its enterprise customers, it's unlikely to be successful, said Gardner.
Businesses "can't just buy a software company and be a software company," he said. Broadcom has to engage with clientele and invest to grow the business.
