Cisco's plan to acquire IronPort , announced last week, is the latest example of a public network vendor buying a smaller, private company focused on blocking e-mail and Web-based threats. While the greater IT security industry is going through bouts of consolidation , the e-mail security market is particularly interesting, because these once-hungry start-ups that once touted themselves as the successful public companies of the future are disappearing into divisions of other companies.
"If anyone was going to IPO, it was going to be IronPort," says Paul Stamp [stet], senior analyst of security at Forrester Research, adding he was somewhat surprised by the Cisco announcement.
IronPort executives often talked about leading the antispam market and building a large, profitable company. "E-mail is broken, and we're going to fix it," was the self-assigned task IronPort CEO Scott Weiss gave his company in 2004 . "It's our ball to fumble."
A common concern when large companies snap up smaller ones in any given industry is that innovation will stall, because big vendors move more slowly than start-ups and may be less willing to take risks on developing new technology. Yet the fact that there are very few public antispam vendors could reflect the fact that spam blocking is better off as a feature, not a product.
"It does make a lot more sense for these [antispam] companies to be acquired, usually by a public company, than to go for an IPO," says Richi Jennings], lead analyst with Ferris Research's e-mail security practice. Pointing to the example of Symantec 's acquisition of Brightmail, Jennings says Symantec now offers an integrated suite of network security that includes e-mail filtering. "They offer it as a single package so you're not just buying it from one place, but also those customers increasingly can manage and operate all of those components from one place."
In the case of Cisco's acquisition, there's plenty of opportunity for integrating IronPort's e-mail security technology with Cisco's network gear, according to Tom Gillis, vice president of marketing at IronPort. On Jan. 2Gillis gave the examples of integrating Cisco's intrusion-prevention systems with IronPort's Web security appliance, and including IronPort's reputation filters with Cisco switches.
"There is an unstoppable tide of embedding security into the infrastructure," Forrester's Stamp says. "Things start out stand-alone and new and less understood, then they get aggregated into suites and then embedded into networks," he says, as vendors respond to customer demand for fewer products and greater integration.
However, that one-vendor-fits-all offering is successful only when its products truly serve customers' needs, one venture capitalist says.
"If the big vendor's solution solves the problem, then customers should [go with them]; that's the most efficient model," says Mark Levine], managing director with Core Capital. "But in security there are still a lot of holes, and there's a lot more development to go."
Being able to call one less vendor for customer support is another benefit of consolidation, one IronPort and Cisco customer says.
"Any streamlining of the support process, i.e., less vendors to call, is usually a good step," says Mark Pfefferman, assistant vice president and director of distributed computing services with Western & Southern Financial Group, a financial-services company in Cincinnati. "Cisco has a very strong Technical Assistance Center [TAC]. Assuming that the TAC will be able to provide the same level of expertise on the IronPort products that they do on Cisco products, the customer should benefit from fewer vendors."
