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Symantec hedges bets with large stake in hosted security

MessageLabs deal pilots security giant into cloud computing

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Analysis Symantec, traditionally one of the more conservative firms in the security market, is attempting to pull off a high-wire balancing act with its surprise $695m acquisition of security software-as-a-service pioneer MessageLabs. The firm is betting that increased revenues in the hottest segment of the security market will justify a high (especially for the current economic climate) acquisition price.

It's also betting it can avoid the possible cannibalization of its traditional on-premise security market, while navigating the tricky business of keeping MessageLabs' technology suppliers, direct competitors to Symantec such as Kaspersky and Sophos, on-side.

Against this the deal offers a good chance to sell MessageLabs services into markets where it has traditionally been weak - the Americas, outside the US, Asia and continental Europe. It also gains the chance to offer a greater range of technologies as a hosted service.

Symantec chief exec John Thompson explained: "MessageLabs has a strong customer base into which we can cross-sell our current online services such as backup storage and remote access".

More than one way to crack a nut

Three technology options have evolved for dealing with problems such as spam filtering, and blocking threats including malware contained in email messages and malicious code on booby-trapped websites. These options are the traditional approach of security software packages running on PCs or servers, specialist appliances, and software as a service.

While the traditional software market is growing in single digit figures, appliance revenue growth is in the low teens and SaaS revenues are expanding at around 20 per cent a year. Whether the high growth rates of (security) software as a service will be maintained is open to question but in the meantime Symantec wants to make hay while the sun shines, paying a high price for a slice of the action.

"As customers recalibrate their infrastructure we hope to gain a bigger share overall. We will not be cannibalizing our existing customer base," Thompson explained.

Adrian Chamberlain, chief executive officer at MessageLabs, added: "Joining with Symantec we can leapfrog into new markets we might not have been able to access for years. In addition there's the potential for us to develop Symantec protection products as an online service, expanding the portfolio, as well as creating a potential to cross-sell existing products."

MessageLabs email filtering services cover much the same technological function as Brightmail spam filtering appliances, another Symantec acquisition. "I'm not concerned at all that we can have Brightmail on premise and MessageLabs, and that the two will work with each other," Thomspson said.

Head in the clouds

Symantec is positioning the MessageLabs purchase as giving customers the option of either on-premise or off-site approaches to solve the same information security challenges. It doesn't see a move into cloud computing as a fundamental architectural shift in how security technologies are delivered, unlike some of its principal competitors - most notably McAfee, Trend Micro and Panda Software.

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