McAfee's Secure Computing Deal Broadens Partner Offerings

The Santa Clara-based company dropped the ball Sept. 22 with news that it planned to embark on a $465-million acquisition for the San Jose-based Secure Computing. Executives say that the deal will likely be wrapped up by the end of the fourth quarter, after which they'll initiate the integration process.

The merger will ultimately make the combined company one of the largest network security players in the industry, executives say. When completed, the acquisition will add Secure Computing's 22,000 customers and more than 2,000 channel partners to those of McAfee's for a total customer base of 125,000 customers and more than 20,000 partners.

Atri Chatterjee, senior vice president of marketing for Secure Computing, said that the process for integrating the two companies would likely take a minimum of one year to 18 months once the deal closes. "It will take years," said Chatterjee. "We're not in any hurry."

McAfee CEO Dave DeWalt said in a written statement that executives anticipated that the combined company will generate an annual projected revenue of just under $500 million in its network security segment of its security risk management portfolio.

Meanwhile, executives say that consolidation in the marketplace is becoming increasingly necessary as more end user customers demand best of breed security solutions from a smaller number of vendors.

"In the security space, people want to reduce their cost of ownership," said Chatterjee. "They can go to a small set of vendors and get what they need. It makes sense for McAfee and Secure Computing to get together." Execs refrained from speculating on whether the merger would result in layoffs.

While McAfee paid just shy of double the amount of Secure Computing's annual revenue, executives maintain the purchase was a deal.

"We wanted to acquire a company that had a large global installation base and a distribution channel," Vimal Solanki, vice president of world wide solutions marketing for McAfee. "It's a very attractive valuation considering all the assets Secure Computing brings to McAfee."

And Secure Computing fit the bill. For both companies, the marriage that combined McAfee's desktop and endpoint protection offerings with Secure Computing's gateway and firewall technologies seemed like a logical progression.

For one, McAfee execs say that Secure Computing's products fill in crucial holes in McAfee's product line, particularly in areas of perimeter security. When combined, both sets of products will create a comprehensive portfolio of client side, as well as network security offerings. Executives say that Secure Computing's products will beef up McAfee's intrusion prevention, firewall, Web security, e-mail security, data protection and network access control capabilities, as well as its spanning detection, filtering, encryption, blocking, archiving, reporting and compliance technologies.

"When we look at this holistically, it's a very positive acquisition," said Solanki. "We can present the entire McAfee portfolio in both endpoint security and network security. It's also very exciting for the partners McAfee partners have additional products to promote."

Additionally, the two companies also offer complementary cloud computing services, executives say. Secure Computing's Trusted Source cloud-based antimalware services will extend McAfee's recently released Artemis Technology which provides users with almost instantaneous reaction to signature files once malware is detected.

Plus, as the Santa Clara-based company makes further inroads into the federal sector, Secure Computing's extensive government clientele became another attractive reason for the purchase, McAfee execs asserted.

The pending merger has been met with resounding enthusiasm from many channel partners. McAfee partners say that the merger will provide more opportunity for them to upgrade their portfolio with an array of specialized offerings and services.

"It's one of the smartest moves McAfee has made in a long time," said Jim Hindy, branch manager for Entre BTG, a TIG company. "It just makes it easier to wrap everything around McAfee."

Hindy speculated that margins would go down as products became more commoditized. "When things get significantly more distributed, it just makes selling them a little more difficult," he said. "But the positives certainly outweigh any of the negatives."

"When things get tight, you have to have new things to talk about with the cusotmers," said Jim Freeman, principal and cofounder of Attain Technologies. "Anytime any one of our partners delivers a new solution set, we can take that to our customers and explain how that fits and how that solves the business problems. And that's a great thing. That's the hardest part in the channel these days."

Freeman also added that the combined program, coupled with a new channel chief, would help enable McAfee to adopt a more intimate channel-centric philosophy.

"They've got to step up and honor their channel," said Freeman. "By watching what (Secure Computing) is doing, it puts more pressure to develop their channel program and get to a company that is in the more traditional VAR channel."