Tuesday, August 05, 2008

McAfee buys Reconnex - another DLP vendor gets acquired

For those that read this blog for Data Security/DLP reasons, you have good reason to complain that I've been neglecting that area in favour of Identity lately. On the flip side, anyone who doesn't give crap about Data Security or DLP can tune out this time around.

Despite Matt P, Clayton and Nishant jokingly suggesting I should write for sitcoms, I'll put that career on hold for now and get back to business...although if Nishant and Paul Walker continue their thread, I could have more paraphrasing fodder :-)

On to the topic at hand...

McAfee announced late last week that they are acquiring Reconnex for $46 million USD. They acquired a few other companies (Onigma for $20 million USD and Safeboot for $350 million USD) to start themselves along the DLP track and have now filled out the portfolio with assets to address some holes in their offering. What were the holes? Data discovery and network monitoring.

The acquisition wasn't a huge surprise. Symantec have traditionally been McAfee's main competitor and happen to also be their biggest competitor in this space.

Symantec started themselves along the DLP track by acquiring Vontu for $350 million USD. Vontu's strength was in its data discovery and network monitoring capabilities. I should also mention they had lots of customers and were considered to be the market leader in DLP. They've only recently branched out into offering endpoint monitoring and control (I assume this is thanks to Symantec's development budget).

Onigma's technology was an endpoint monitoring and control product. This meant that when McAfee compared itself to Symantec, it found itself sorely lacking from an overall solution standpoint (at least from a marketing perspective). Reconnex fills the void.

Let me take Safeboot out of the picture for a minute because it doesn't compete directly with the Vontu technology. McAfee's only had to pay a fraction ($20+$46 = $66 million USD) of the amount Symantec spent ($350 million USD) to get a comparable set of products. If you do the maths, it's less than one fifth! At face value either McAfee got a steal or Symantec got screwed. To be fair to Symantec, they did have to pay a premium because they were buying "the market leader" and also the set of customers Vontu had. DLP was also a much "hotter" topic at the time (it still is, but the buzz isn't as crazy) and in case you haven't noticed the world economy is in a bit of a slump at the moment. Even after taking these factors into consideration however, I'm not sure that premium should have been 5 times the amount McAfee forked out.

Your move Symantec...which brings me back to Safeboot. Symantec announced their Endpoint Encryption offering earlier this year. In reality, this is an OEM agreement with GuardianEdge and a direct response to McAfee's Safeboot offering. I wonder how long it'll take Symantec to buy GuardianEdge now that McAfee's filled their gaping DLP hole?

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