VERITAS Software Corp, one of the world's leading storage management software providers, based in California, plans to set up a research centre in China this year to fully capture the buoyant market.

The company has acquired a nearly 30 per cent share in Greater China's storage management software market, according to IT consultancy firm IDC's studies.

VERITAS now has a more ambitious expansion plan to grab a bigger market share after its four-year presence in the region, P.W. Pong, the company's president for the Greater China region, told China Daily.

"The establishment of the research centre in China will further localize our products and provide better service and solutions to our clients," said Pong, an IT management veteran with more than 23 years of experience in Greater China.

The location will be decided soon in three major mainland cities -Beijing, Shanghai and Shenzhen -by taking advantage of "pool of Chinese IT professionals", he noted.

The research centre will be set up by the end of this year or early next year with 10 to 20 research staff at the beginning, he added.

The market for storage software has grown fast across the Asia Pacific region. A recent IDC research revealed that a 48 per cent surge was recorded in the region in 2001 while the growth would triple over the next five years with the focal location of the growth in the Greater China region and South Korea.

"We have seen rising demand for our storage software in the mainland market, especially in the finance and IT sectors as well as the government departments as the country is popularizing the e-government project nationwide," said Pong. Currently, about 40 per cent of its mainland revenue comes from the IT industry.

The market edge of the company has been further sharpened after it completed a US$609 million cash and stock purchase of Precise Software Solutions, a leader in application performance management (APM), in June.

Precise has led the world APM market with 22 consecutive quarters of revenue growth.

"The marriage of VERITAS and Precise created a synergy in terms of products and distribution network, which could help us secure a firm foothold in the Chinese market," said Pong.

Precise's APM products, which could diagnose the application problems and provide one-in-all solutions, are still new to the mainland market but have good market potential.

IDC estimated that the global market size for APM products could reach US$11 billion in 2006. "We expect Precise's products could take up at least 50 per cent of the world market, or US$5 to US$6 billion revenue by using IDC's estimated figure, since they are the best products," said Pong.

"We also have confidence for the products in the mainland market because many of the big companies have application problems," he said. "Give us six months, the situation will be very optimistic," he added.

Since VERITAS launched the products two months ago, it has attracted some 50 corporate customers in the Greater China region, Pong said.

Apart from direct sale, VERITAS has signed agreements with two major IT distributors on the mainland - Digital China and Neusoft - at the beginning of this year as general agents.

"We expect the revenue contribution from Asia Pacific Region to the group could reach 15 per cent in two or three years from the current 10 per cent," said Pong.

The Asia Pacific is the fastest growing region within VERITAS despite a presence of five years, with all areas of the region achieving double-digit growth. VERITAS will set up a solely-owned company on the mainland this year while currently it has four representative offices in Beijing, Shanghai, Guangzhou and Chengdu with over 120 employees.

Pong said the company did not rule out the possibility of acquiring mainland promising IT companies but the products must be a synergy with the existing products.

Listed on the NASDAQ National Market in 1993, VERITAS has been the fifth largest software company by market capitalization.

The revenue amounted to US$413 million for the second quarter of this year, representing a 13 per cent growth year on year and the highest revenue in the company's 14-year history.

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