Cisco Gets The Message With $830M E-Mail Security Acquisition

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Cisco Systems is starting off the New Year with a bang, snapping up messaging security vendor IronPort Systems for $830 million.

With the acquisition, unveiled Thursday, Cisco is expanding its reach into e-mail security appliances, a new piece of the security market for the San Jose, Calif.-based vendor. The deal is set to close by April.

Privately held IronPort, San Bruno, Calif., makes e-mail security, Web security and security management appliances that fight spam, spyware, malware, adware and other threats.

"We feel there is enormous potential for enhanced e-mail and message protection solutions to be integrated into the existing Cisco Self-Defending Network framework," said Richard Palmer, senior vice president of Cisco's Security Technology Group, in a statement. "Using the network as a flexible platform to integrate IronPort's technologies, Cisco will be able to build new security applications as customers' demands evolve." The IronPort team and product portfolio will be integrated into Palmer's group.

Cisco said in the statement that it is "committed to retaining the relationships and go-to-market strategies that both companies have developed." IronPort's go-to-market strategy features 500 channel partners worldwide, including 150 partners in North America.

Cisco's timing in entering the mail security market couldn't be better, said Tim Hebert, CEO of Atrion Networking, a Warwick, R.I.-based solution provider that works with both vendors.

"We're seeing a number of people that I would call early adopters [replacing their mail security solutions] in the last year and really looking for more manageable, easier-to-use, higher-performance solutions that have a high level of accuracy, so I think [Cisco] buying the IronPort solution today is a great move," Hebert said. "You're going to see an explosion of anti-spam/mail security-type solutions being purchased and replaced in the next few years."

The strength of the Cisco brand and the work Cisco's sales reps will do to talk up the product line should result in increased IronPort sales for the channel, Hebert said. The Cisco name will also give partners a leg up against IronPort competitors such as Proofpoint and Secure Computing's CipherTrust line on the high end and Barracuda Networks on the low end, he said.

Hebert said discussions with both companies have assured him that Cisco will limit distribution of the IronPort portfolio by requiring channel partners to achieve training and certification in order to sell the product line, much as it does with its IP communications lineup.

"You're not going to immediately see the field flooded with 3,000 North American partners selling IronPort without investing in it," Hebert said.

The IronPort product line today affords Atrion an average product margin of 20 percent to 22 percent, yields recurring license revenues and high service revenue opportunities as well, Hebert said.

IronPort has strong technology but is still relatively unknown outside security circles, according to a solution provider who partners with IronPort and Cisco.

"The power of the Cisco brand is going to shorten our sales cycles because we won't have to spend time explaining to customers how IronPort stacks up against competitors like Proofpoint and Barracuda," said the solution provider, who requested anonymity.

IronPort, which has garnered more than $100 million in venture funding, was believed to be considering an IPO last year and has been moving to diversify its offerings to fend off larger players moving into the content and messaging security space.

To diversify its offerings, IronPort recently partnered with data leak prevention startup Vontu and antispyware vendor Webroot and announced plans to acquire e-mail encryption vendor PostX. IronPort also recently moved into the antispyware arena with the release of its S-Series appliance, which scans Web traffic at the gateway using signature analysis and features a high-speed malware scanning engine that's designed to incorporate antispyware signatures from multiple vendors.

The IronPort technology portfolio will also bring Cisco protection against image spam, an emerging spammer tactic that involves putting commercial e-mail text into image format in order to slip messages past traditional spam filters. IronPort fights image spam through a technology that uses hundreds of thousands of rules and examines image size and colors to determine whether it contains spam.

IronPort was founded in 2000 and has 408 employees.

With additional reporting by Kevin McLaughlin.

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