Private equity firm Thoma Bravo is selling its investment in SonicWall to Dell in a deal that will expand the computer maker’s security industry presence with the addition of a next-generation firewall business.
Dell is trying to expand their breadth with enterprise customers and they’re reasonably seeing that they have gaps in their product line and are looking to fill them.
Mike Rothman, analyst, president, Securosis
Financial terms of the deal were not released.
In addition to next-generation firewalls, San Jose, Calif.-based SonicWall sells unified threat management (UTM) appliances. Thoma Bravo acquired SonicWall for $717 million, taking the security vendor private at a time when it was struggling with its stock price despite making headway with enterprise deployments of its next-generation firewall, said Mike Rothman, analyst and president of security research firm Securosis. Thoma Bravo likely helped the appliance maker reorganize its finances, giving it a much needed infusion of cash, Rothman said.
“The deal with Dell shows that if you clean up a lot of the operational things there’s clearly opportunities to find large upstream buyers that want some additional real estate in the security market,” Rothman said. “This is a compelling deal; Dell is trying to expand their breadth with enterprise customers and they’re reasonably seeing that they have gaps in their product line and are looking to fill them.”
Dell has been steadily expanding its security portfolio. Analysts say its latest move to pick up SonicWall could boost its data center security management capabilities targeting Cisco Systems Hewlett Packard and IBM.
Dell began selling managed security services and products to midsize businesses by acquiring SecureWorks in 2011. It also acquired Kace Networks, a desktop vulnerability and patch management appliance for small and midsize businesses.
Experts say Dell strategy aims at Cisco Systems, HP, IBM
The Dell-SonicWall acquisition broadens Dell’s increasingly formidable data center infrastructure and services strategy with a next-generation firewall product
At the time of the SecureWorks acquisition, Dell said it needed to add security services to its portfolio. It was currently selling infrastructure services, distributed computing services, storage services and application management. Analysts say the company move suggest it is moving upwards from selling to small and midsize businesses to larger enterprises.
SonicWall’s next-generation firewall is aimed at larger enterprises, including government, university and service provider deployments that require scalability, Dell said. SonicWall’s centralized management system is used by network administrators to manage security appliances across a distributed network. Security components supported by SonicWall include secure remote access, email security, backup and recovery, and policy, management and reporting. The company has more than 130 patents, registered and pending, and develops all of its own key security gateway intellectual property, Dell said.
SonicWall’s competitors include Barracuda Networks, Fortinet, Stonesoft, Sophos and WatchGuard. The market is dominated by other vendors, including industry networking giants Cisco Systems, Check Point, Juniper and Palo Alto Networks.
Rothman said Dell’s challenge will be how to cleanly fit SonicWall into its portfolio without having organizational issues. “It’s not clear who is going to be running the day-to-day,” Rothman said. “Dell has a huge go-to-market engine for SonicWall’s products, but SonicWall does boxes, it’s not a software or services player.”
Dell said SonicWall has approximately 300,000 customers. It also has a strong channel program, according to Dell. SonicWall’s channel will be combined with Dell’s PartnerDirect program, the company said.