Holiday Shopping: Check Point, VeriSign Buy Security Vendors

This past week, Check Point Software Technologies announced its intent to acquire Zone Labs for $113 million in cash and $92 million in shares. The vendor is continuing to evaluate other acquisition targets as well, said Jerry Ungerman, president of Check Point, Redwood City, Calif.

The deal opens up the SOHO market to Check Point with Zone Labs' PC firewall and pits it against Cisco Systems' solution in this space. Check Point also gains San Francisco-based Zone Labs' Integrity enterprise endpoint security solution. Check Point did not have an endpoint solution of its own.

"Zone Labs' PC firewall is part of Cisco's VPN solution, but now Check Point will be competing directly with Cisco, using the solution Cisco is,or maybe now was,using," one solution provider said. "Check Point opened a whole new market with this acquisition, and I'm sure Cisco and NetScreen are keeping an eye on them."

Check Point expects the acquisition to close in the next quarter. By that time, the vendor will have training, pricing and support in place for the channel to start selling Zone Labs' products, Ungerman said.

"This is a revenue-generating opportunity for our thousands of partners around the world," he said. "All of our customers are asking for endpoint solutions, and until now, we didn't have one. We can't start formal training until the deal is closed, but we can start introducing Zone Labs' [products] to our channel."

Also bulking up its portfolio last week was VeriSign with the pending $140 million cash and stock acquisition of managed security solution provider Guardent.

VeriSign often competed against Guardent for managed security solutions, such as firewalls and intrusion detection, said Mark Griffiths, vice president of security services at VeriSign, Mountain View, Calif.

VeriSign intends to keep both companies' channel strategies in place, he said. Guardent generates about 50 percent of its revenue from the channel, while VeriSign generates about 25 percent.

"We've invested a lot in training the channel, and it has paid off for us," said Dan McCall, executive vice president and co-founder of Guardent, Waltham, Mass.

Many of Guardent's resellers opt to private-label the vendor's service and layer their own solutions on top of Guardent's platform, McCall said.

Tim Hebert, CTO of Atrion Networking, a Guardent partner in Warwick, R.I., said he expects more consolidation in the security space. "Security is so fragmented. That's really the problem vendors are trying to solve," he said. "They all need to fill in the gaps, and the way to get there fast is through acquisitions."

Tom Dolan, executive vice president of Westcon Group, a value-added distributor in Tarrytown, N.Y., said spam and other security risks drive customers to buy and, in turn, push vendors to make sure they have these types of solutions on hand.

"With issues like spam and viruses, companies want to go with a known brand for a firewall to cover themselves," Dolan said. "An IT person isn't going to get fired for buying a Check Point firewall, for example, so customers are leaning toward the known brands, and they expect these vendors to have a full solution," he said.

"There are just too many gaps out there, which is why we're seeing smaller companies crop up to plug the holes and the known brands [vendors] buying them up," Dolan said.