McAfee Claims No. 1 Pure-Play Security Spot with Secure Computing AcquisitionBy Lawrence Walsh | Posted 2008-09-23 Email Print
By buying its smaller rival, McAfee reclaims technology it sold nearly seven years ago and will give its solution provider partners access to a wide breath of products from Web filtering to identity management.
With the acquisition of Secure Computing, McAfee is solidifying its spot as the world’s largest pure-play security technology vendor, positioning itself better against key competitors and opening a mother lode of new technologies to its channel resellers.
McAfee will pay $465 million for Secure Computing, one of the oldest security companies in the marketplace. With nearly $238 million in annual revenue plus $89 million from its recent acquisition of Aladdin Knowledge Systems, the combined companies will generate more than $1.6 billion in security product sales.
"We expect the pending combination of McAfee and Secure Computing will create an annual projected combined revenue of just under $500 million in the network security segment of our [security risk management] portfolio," said Dave DeWalt, chief executive officer and president of McAfee, in a statement. "We believe that this pending acquisition will allow us to immediately establish a leading and highly competitive position in the network security space."
Ironically, one of the products McAfee will acquire is—in part—a product is jettisoned nearly seven years ago. In 2001, Network Associates—the precursor to today’s McAfee—sold off a number of underperforming units amassed by the company in hopes of creating the "one-stop security shop" for enterprise IT users. One of those units was the Gauntlet firewall, then considered one of the better security products on the market.
Secure Computing merged the Gauntlet firewall technology with its Sidewinder appliance to create the "Sidwinder G2" firewall. While some security purists were skeptical of the blending technologies, reviewers gave the combined product high marks for performance.
The price Secure Computing paid for Gauntlet wasn’t disclosed at the time of the sale. However, analysts figured Network Associates gave it away for a low figure just to rid itself of the management and marketing burden. In the year’s following, Network Associates and later McAfee pared its products to pure network security offerings but lacked any that resembled a firewall until its acquisition of intrusion-prevention appliance company IntruVert in 2003 for an estimated $100 million.
With the Secure Computing acquisition, McAfee is getting back its firewall, now called "Secure Firewall," as well as a boat load of other security technologies that will better position the company against key competitors and provide its partners with a wider breath of security products.
Secure Computing has long been in the USB token and certificate market, competing against RSA Security and VeriSign. The addition of Aladdin Knowledge Systems in July provided a deeper bench of identity management technologies. The company’s suite of Web monitoring and Web filtering technologies gives McAfee access to products that will help it compete against Trend Micro, Websense and startup Purewire.
Probably the most powerful weapon in Secure Computing’s quiver is its e-mail security offerings. In 2006, Secure Computing purchased CipherTrust, a pioneer in e-mail security appliances and reputational scoring of e-mail security threats. Now called "Secure Email," the product will give McAfee a competitive offering to Cisco’s IronPort, Symantec’s Brightmail and hardware alternative to Google’s Postini services.
"I believe the combination of the two companies will allow us to reap the benefits of a worldwide dedicated sales team three times our size, best-in-class security research, greater partner distribution and enhanced cross-selling opportunities," said Dan Ryan, president and chief executive officer of Secure Computing, in a statement. "Combined, we believe we will become a leader in the network security space."
Under DeWalt’s leadership, McAfee has focused more of its attention on security risk management, bringing many of its core technology together to create holistic, enterprise-class and midmarket offerings that proactively protect and respond to security threats.
While McAfee is the largest pure-play security vendor, it still lags behind other hardware and software vendors—such as Cisco, Symantec and Microsoft—in total sales of security products.