Symantec Rounds Out Email Portfolio with MessageLabs

| Oct 10, 2008 | Data Center | Competitive Intelligence Report

| Analyst: Steve Schuchart

Current Perspective: Positive/Neutral
Vendor Importance: High
Market Impact: High

Event Summary

October 8, 2008 – Symantec has announced it has signed a definitive agreement to acquire MessageLabs, a provider of online messaging and Web security services. Under the terms of the agreement, Symantec will acquire MessageLabs for a purchase price of approximately $695 million in cash, subject to foreign currency adjustments, payable in approximately £310 million pounds sterling and $154 million U.S. dollars.

Analytical Summary

• Current Perspective: Slightly positive on Symantec’s purchase of MessageLabs because it rounds out Symantec’s email archiving and security portfolios as well as providing them with new global channel outlets and a strong SaaS customer base. However, Symantec paid a pretty penny for MessageLabs and it raises the question as to why Symantec could not have extended its own BrightMail products into a SaaS product. On top of that, Symantec will now have to spend considerable time and effort integrating MessageLabs into its corporate structure.

• Vendor Importance: High to Symantec, because MessageLabs brings technology, global reach for its services through 14 data centers on three continents, more than 500 employees with strong SaaS sales and support expertise, an impressive customer list (19,000 strong), sizable revenue ($145 million in FY08) and solid growth (20% year over year [FY08/FY07]). The deal is also of high importance to MessageLabs, which finds a potentially safe harbor and increased customer recognition in Symantec and ceases to operate as an independent entity.

• Market Impact: High on the email archiving market, as MessageLabs was one of the largest service players in that market. On top of that, Symantec will be able to offer the plethora of other email-related services that MessageLabs offers, including anti-spam and secure messaging. However, the combined companies will still lack any sort of real legal discovery option.

Recommended Competitor Actions

• Competitors should be aware that Symantec is a bigger threat than just the disposition of its MessageLabs and BrightMail products. Symantec, through its acquisition of VERITAS, has a full suite backup software as well as a considerable stable of security software. This makes it possible for Symantec to offer its services as a suite, making it difficult for competitors to shine in the deluge of its other product features.

• Competitors who have a legal discovery capability should use that as the primary weapon against Symantec/MessageLabs. It is an easy argument to make to customers that all the email archiving in the world will make very little difference if considerable cost has to go into the retrieval of the data in the event of a court action.

• Competitors who lack SaaS options or are SaaS-only need to act quickly. It has become readily apparent that complete players in the email archiving space offer both service and appliance options for customers, in order to appeal to the largest segment of customers as possible.

Recommended End User / Customer Actions

• Existing Symantec customers should be pleased with this announcement. This acquisition will provide Symantec customers with additional deployment choices and more flexibility in provisioning services, particularly to new users.

• Existing MessageLabs’ customers should be mildly positive regarding this announcement. Symantec is a large and fairly stable home for MessageLabs but one with a mixed record for integrating acquisitions. The good news for MessageLabs customers, or any organization that adopts SaaS, is that switching costs are low.

• Prospects should consider Symantec’s entire line of Web security, archiving and secure messaging solutions. The company offers software, appliances, virtual appliances and now SaaS. It will also, no doubt, offer a combination of these deliverables to provide hybrid solutions.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

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