McAfee: An Overnight SaaS Sensation

| Aug 4, 2009 | Enterprise Security | Competitive Intelligence Report

| Analyst: Paula Musich

Current Perspective: Very Positive
Vendor Importance: Very High
Market Impact: High

Event Summary

July 30, 2009 – McAfee announced its plans to acquire secure messaging services provider MX Logic for $140 million plus an additional $30 million in earn outs, creating one of the largest portfolios of security as a service offerings. MX Logic, which provides hosted secure messaging, Web security services, email archiving and business continuity hosting, will be combined with McAfee’s existing Total Protection Service for endpoints and other hosted offerings.

Analytical Summary

• Current Perspective: Very positive on McAfee’s proposed acquisition of MX Logic for $170 million, because it instantly makes McAfee a serious contender in the cloud-based secure messaging services market. MX Logic is one of the top five secure messaging services providers, and it brings a well-rounded portfolio of services including not only secure messaging but email archiving, hosted Web security and new business continuity services. McAfee can now compete on a par with market leaders such as Google/Postini and Symantec/Message Labs in a market that is seeing growth rates of between 20 to 30 percent.

• Vendor Importance: Very high to McAfee, because it suddenly went from having very little mind share in the fast growing security as a service market to becoming one of the top five vendors in the space. MX Logic delivers services to McAfee’s 40,000 customers with 5 million end users under its protection, along with 1,800 channel partners. It brings a strong base of SMB customers and the opportunity for McAfee to deliver a wider range of services to larger enterprise customers. McAfee also now has the opportunity to create hybrid services that filter out 80 percent or more of inbound spam in the cloud, coupled with its own appliances or software at the customer location that can provide outbound protection such as encryption and data leakage prevention.

• Market Impact: High on the hosted secure messaging services market, because McAfee brings its deeper pockets, global reach and well-respected brand to a fast growing market increasingly dominated by large competitors such as Google and Symantec. Although McAfee had dipped its toes in the water prior to the proposed acquisition, this move signals that the company is serious about becoming a dominant provider of security as a service offerings.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

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Recommended Competitor Actions

• Rivals such as Google, Symantec and even Microsoft can characterize McAfee’s proposed acquisition of MX Logic as a “me too” move that is coming late in the game, and from a vendor with very little experience in the hosted services space.

• McAfee just gave Microsoft an even bigger reason to move forward quickly with its Forefront for Exchange Servers beta and integration plans for Stirling. Microsoft has a tendency to move fairly slowly, but competition is shaping up quickly among large and well-established vendors.

• Rivals that now offer SaaS secure messaging services that front end existing McAfee appliances should focus extra love on those customers to insure they don’t jump ship. McAfee will surely target those customers with attractive lures, including a hybrid offering, to try to gain more of their business.

• Smaller competitors such as Mimecast should continue to focus on innovations that make their services even more attractive than those of large vendors. As those large vendors seek to heap on more services to gain a greater share of wallet, small competitors should question their ability to really meet customer requirements and offer support that stands out.

Recommended End User / Customer Actions

• MX Logic customers should feel confident that the secure messaging services they rely on will continue to be supported and improved upon.

• MX Logic customers should press McAfee on how it intends to migrate their service to the new platform, and on what impact they will see as a result. They should seek assurances that the migration will be a seamless one.

• Prospective customers looking at SaaS secure messaging services have even greater negotiating leverage in putting deals together and can now play at least four main rivals off of each other to get the best deal possible.

• Larger customers using existing secure messaging software or appliances should consider front-ending their on-premises infrastructure with a cloud-based inbound filtering service. It pushes the requirement to build out for spikes in spam traffic back onto the service provider, allowing customers to fight spam more economically and bring a measure of predictability to forecasting and budgeting.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - More reports in Enterprise Security | More information

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