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HP Broadens its Security Play with $1.5 Billion ArcSight Acquisition
| Sep 16, 2010 | Security Services, Enterprise Security
| Analysts: Amy Larsen DeCarlo, Andrew Braunberg
Event Summary
September 13, 2010 - HP announced that it has signed a definitive agreement to acquire ArcSight, a security and compliance management vendor, for $43.50 per share, or an enterprise value of $1.5 billion. The combination of HP and ArcSight will improve security, reduce risk and facilitate compliance for customers. ArcSight’s technology is highly complementary to HP’s existing security portfolio of hardware, software and services.
Quick Take
Analytical Summary
• Current Perspective: Moderate on HP’s acquisition of ArcSight, because although HP gains leading-edge SIEM technology and a blue chip customer base, it was late to appreciate the value of SIEM and has paid a significant premium to get into the market now.
• Vendor Importance: Moderate to HP, because the company has been building out its security portfolio through acquisition (e.g., 3Com/TippingPoint and Fortify) and internal development (e.g., ProCurve) for a while now. This acquisition is a significant addition to anchor HP’s security services capabilities and will increase the company’s visibility and reputation as a security provider. But the company is still far from being a strategic security services provider and seems more intent on playing in small patches of the security markets.
• Market Impact - Enterprise Security: Moderate on the SIEM market, because ArcSight was a leading vendor in the space, particularly in addressing the needs of the Fortune 100. In a lot of ways, this deal is reminiscent of EMC’s acquisition of RSA, which at the time was a successful mid-sized security company with a fairly limited portfolio but great brand recognition and an impressive and growing customer list. The trends that drove RSA to look for a larger home in 2006 are the same ones that drove ArcSight in a similar direction. These trends include: a shift in threats from the network perimeter to attacks on information itself, a need for tighter integration between security products and IT infrastructure, and a customer bias toward working with a smaller number of larger vendors.
• Market Impact - Security Services: Low on the managed security services (MSS) segment, because while the ArcSight purchase gives HP’s security portfolio a significant boost, HP has a major game of catch up to play. This is a game that will require more resources – and time – before HP becomes a real threat to any rival.
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Competitive Positives and Concerns
Response & Recommendations
Analytical Perspective
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