Consolidation is speeding up in the security software industry with the news that market leader Symantec is to acquire the online email filtering service MessageLabs for $695m. John Stokdyk reports.
Set up by brothers Ben and Jos White in Gloucestershire in 1999, MessageLabs is the world leader in online email and messaging security, supporting more than 2.5bn email connections. Symantec is paying nearly five times MessageLabs' revenues to 31 July 2008 of $145m, which grew by 20% from the previous year.
Once it gains regulatory approval, the deal is expected to complete by the end of the year. Symantec will integrate MessageLabs' services with its own online Symantec Protection Network to create a security software as a service (SaaS) product group. MessageLabs brings online email/storage and filtering services to the party, while Symantec's online services currently include backup, storage and remote access products.
"The acquisition of MessageLabs strengthens our commitment to the Software as a Service (SaaS) model and advances our vision to offer customers the flexibility to manage their business using online services, onsite software, or hybrid onsite and online solutions."
Market analyst Forrester commented that Symantec "got it right" by offering the flexibility for organisations to keep their email servers on-premise, but outsourcing email filtering, which is often cheaper and more efficient for hard-pressed IT departments. Initially, the stock market showed little reaction to the deal, but a few days later Symantec's share took a dive - along with many other technology stocks.
The current share prince crisis is likely to slow the consolidation movement temporarily, but other deals could be in the offing. Symantec already acquired PC Tools in August, while its rival McAfee, agreed to acquire Secure Computing for $465m in September and Reconnex in August. Sophos, meanwhile, has bought Utimaco Safeware. Enterprise-level security is big business these days, and like other sectors of the IT industry, the majority share of the market will soon be owned by a small number of large players.
