Symantec to acquire MessageLabs for SaaS model

Symantec Corp. CEO John Thompson said MessageLabs technologies will be used to offer Web security and instant messaging protection as a service.

Symantec Corp. dove headfirst into the security Software as a Service (SaaS) pool today with the announcement that it has agreed to acquire U.K. managed messaging security services provider Messagelabs Inc. for $695 million.

"If customers want a SaaS model, we can offer them the MessageLabs service as an alternative. This is about giving customers choice."
John Thompson, CEO, Symantec Corp.

The cash deal is subject to European regulatory approval, and both sides expect it to close by this year's end.

MessageLabs is a popular security provider in Europe -- 63% of its revenue is generated from Europe, Africa and the Middle East, and 28% from the U.S. The deal exposes MessageLabs to Symantec's expansive customer base and channel partners. It also essentially spells the end of independent messaging security services providers. MessageLabs, with $145 million in revenue for fiscal 2008, stood alone since Google Inc. acquired Postini in July 2007. Microsoft acquired the other major services competitor, FrontBridge Technologies Inc., in 2005. Microsoft turned FrontBridge's offerings into Microsoft Exchange Hosted Services.

MessageLabs brings not only messaging security services to Symantec's portfolio, but also Web security and instant messaging protection. Symantec CEO John Thompson said his company will have a strong story for customers, combining MessageLabs' capabilities with Symantec's DLP, compliance, archiving and endpoint security offerings.

Thompson stressed that MessageLabs' messaging security services are complementary to the Brightmail technology acquired in 2004 for $370 million. Brightmail is gateway antispam and antivirus messaging protection, and as part of a long-term partnership with Symantec, has been a component of MessageLabs' antispam service offering.

"While there is similarity in technology, there is no overlap in delivery model," Thompson said, explaining that MessageLabs' services are delivered from its 14 data centers around the world. "Many customers want an appliance where they do the work of managing the spam filtering process, and we have Brightmail for on-premise-based spam filtering. If customers want a SaaS model, we can offer them the MessageLabs service as an alternative. This is about giving customers choice."

In an email exchange, Jonathan Penn, vice president and principal analyst at Forrester Research Inc. said the acquisition strengthens Symantec's overall market footprint in email content security. Penn expects more acquisitions in this space as vendors respond to the uncertain economic conditions.

"Symantec still remains weak in Web content security and other big players will also see acquisition opportunities to consolidate the market in this economic climate," he said.

While the acquisition moves Symantec into the SaaS market, it isn't a very significant move, since Symantec isn't SaaS-enabling all its products, Penn said.

MessageLabs technology is based on its proprietary Skeptic technology that scans daily the three billion messages and one billion connections through its worldwide network.

"We're able to take threat and reputation filtering from one protocol such as email, and apply that to Web security," said MessageLabs CEO Adrian Chamberlain. "That is unparalleled intelligence for our customers."

Chamberlain will be running the new SaaS group at Symantec, Thompson said.

MessageLabs has 19,000 customers worldwide. Financial services and manufacturing are the two biggest vertical markets it services. Thompson said Symantec will take on most of MessageLabs' 550 employees, in particular those working in service delivery, sales and support.

Symantec is also strong in the email security product market, its appliances competing with Cisco's IronPort products and McAfee's Secure Mail (via the recent Secure Computing acquisition). Thompson said the services-products combination will give Symantec a 30% market share in the messaging security market.

"There is a tremendous advantage combining these two teams, customers and services," Chamberlain said. "All with the shared goal of helping customers secure their most valued asset -- their information."

Information Security senior technology editor Neil Roiter and SearchSecurity.com news editor Robert Westervelt contributed to this report.

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