Seagate Technology Refocuses its Software Business

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Event Summary

Over the past six months, Seagate Technology has made major moves to refocus their majority-owned subsidiary, Seagate Software, and put all the emphasis on their business intelligence products. These products were acquired in the early to mid-1990's with the purchase of Crystal Computer Services (Crystal Reports), and Holistic Systems (Holos OLAP product).

Steps taken by Seagate:

  • Reorganized the Seagate Software subsidiary. This effort was begun in May of 1999 with the sale of the Network and Storage Management Group (including the Palindrome and Arcada disk backup products, among many others) to Veritas Software Corporation. Seagate Software now contains only the Information Management Group, which consists of Crystal Info, Crystal Reports, Crystal Reports for Microsoft BackOffice, and Holos. In fiscal 1999 the Information Management Group products contributed 41% of Seagate Software's revenue. Seagate Technology stated that "management believes that the separation of Seagate Software's Veritas stock (the network and storage management products) and the IMG business (Crystal and Holos) will provide a clearer incentive for employees of Seagate Software to focus on the future development of the IMG business".

  • On June 15, Seagate announced the "free software initiative", the distribution of millions of copies of Seagate Analysis and a 50-user copy of Seagate Info 7. By July 21, over 35,000 copies had been requested.

  • On July 26, Seagate announced participation in the Microsoft Visual Studio Integration Program, which gives Seagate access to the developer community. Crystal Reports will now ship directly with Visual Basic.

  • On September 3, Seagate announced the repurchase of the small minority of stock held by various employees, directors, and consultants so that Seagate Technology will own 100% of Seagate Software. The reorganization and repurchase are expected to require that 8 million shares of Seagate Technology stock be issued to stockholders and optionholders of Seagate Software. Seagate Technology expects that charges of approximately $216 million will be recorded during the quarter in which the reorganization closes.

  • As part of its continuing free software initiative, Seagate distributed over 200,000 free copies of Seagate Analysis and Seagate Info 7 to Microsoft BackOffice users.

  • On September 28, Seagate announced that they had achieved "Oracle E-Certification" by meeting the technical requirements of Oracle Corporation's Product Certification Program. Seagate successfully demonstrated their products' integration with Oracle's warehouse products to achieve certification.

  • On September 29, Seagate distributed a new free "Reporting and Analysis Solutions" CD for Microsoft BackOffice users. Microsoft BackOffice now ships with Seagate Info bundled into the package. The product ships with pre-built reports for machine configurations, network traffic patterns, and others, with over 100 administrative reports in total. Seagate also stated that the product fully supports the new features of Microsoft SQL Server 7.0.

  • On October 5, Seagate extended the free software initiative to users of SAP products, by shipping Seagate Analysis and Seagate Info with SAP R/3 drivers and sample reports for several SAP applications. These drivers and reports can simply be plugged in and used immediately. Once again, the product is shipped with a free 50-user license. This product can access R/3 data via the ABAP dictionary and report directly from the SAP database. It also has an ABAP query driver, which allows reporting from pre-built ABAP queries (Crystal Reports only). In addition, the products are BAPI certified against SAP's Business Information Warehouse (BW).

Market Impact

Seagate Technology has made it clear that their Seagate Software subsidiary will be focused on the query/reporting segment of the business intelligence market. Their free software initiative has allowed deep penetration into the market space, and will allow customers to evaluate and implement Seagate's software without cost or risk. This move will increase their market share and will affect the sales of competing products such as Cognos Impromptu, Oracle Reports, Computer Associates/Platinum Technology Forest and Trees and InfoReports, and Brio/Sqribe reporting tools, among others. Given the strong commitment displayed by Seagate, customers should feel confident that the products will continue to be supported and improved.

User Recommendations

Customers investigating a query/reporting tool should evaluate Seagate Software's solutions. The company has taken bold steps, especially in their "free software initiative", to gain market share over their competitors, and it is clear that Seagate is in the query/reporting market for the long haul. Seagate Technology divested Seagate Software's network and storage management product line, which would seem to be closer to their core business (Seagate Technology is the world's largest manufacturer of disk drives), in favor of the Information Management Group. This level of corporate commitment should be taken into account during the selection process, especially given the fact that many of Seagate's competitors have huge, diversified product lines where any particular product could be discontinued at any time.

Seagate Software's Crystal product line should be included on any company's list of candidates for a query/reporting tool selection.

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