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Tuesday, July 04, 2006

Towards a more generalized Storage & Security industries convergence? Proof is the EMC acquisition of RSA Security

It had been a while since a major storage and security convergence M&A transaction hadn´t occurred (in December 2004, Symantec and Veritas had merged).

What happened last week is, when it comes to industry trends forecasting, very telling: EMC, the world-leader in storage solutions, has acquired RSA Security, the successful access and identity management software company. RSA hit the headlines recently when it partnered with antivirus software company Panda to dismantle the Clickbot.A application e-mafia (a virus monitored by a network of e-crooks that tracked "Pay-per-Click" pages and clicked on it automatically).

Although I believe the $2.1bn valuation grants RSA shareholders with a pretty nice premium, the move clearly makes sense, strategically speaking: companies are fed up having to deal with tons of vendors when implementing a new information security solution (hardware vendors, security auditors, storage architects, software engineers, deployment consultants, training consultants, etc.). Thanks to the EMC - RSA integration, clients will be dealing with this one-stop integrator that will provide the storage solution and the software that goes with it. Simple, isn´t it? It´s exactly as if you purchased a new PC (or a door) and had to go and buy the operating system (the key...) on the side: why bother?

I actually came to know about this deal thanks to Philippe Becher, the founder and managing director of Vadis Partners. Vadis Partners is an international capital and business development consultancy: Philippe´s teams help their clients (Israeli high-tech start-ups in security, storage and telcos) expand their business base through frequent international expansion missions in Europe and the United States (fundraising, new clients hunt abroad, strategy consulting, etc.). When I met Philippe in Tel Aviv, I was impressed by his drive and talent to convince. Prior to founding Vadis Partners, Philippe had worked for the World Bank in Russia, for a major French banking institution, and finally for the Fantine group - at the time the major Israeli Private Equity group. When Fantine went bust, Philippe founded Vadis Partners, which is now a major player in the security - storage - telcos consulting business.

From what I understood from my last talk with Philippe, Vadis Partners´ client portfolio has doubled in size and volume in the past year(Israel is a nest of start-ups with outstanding technological capabilities and they´re all willing to expand internationally). Philippe has eventually achieved what he had set out to do: allow companies with fantastic customer and technological assets like RSA Security, a long-term client of Vadis Partners, to be purchased by a giant like EMC. And this is only a beginning...
Congrats Philippe: you make Israeli technological breakthroughs available to the world!

No doubt you´ll get to read more about Vadis Partners and its clients technologies in the future on this very blog.


  • Jeremy, what do you think about CheckPoint? Can CheckPoint play a role in the new security M&A wave?

    By Anonymous Anonymous, at 7/05/2006 11:52:00 AM  

  • Dear Anonymous,

    I´ve never said that there was an upcoming consolidating wave in the security industry!

    My point was that EMC - RSA, two companies, respectively focusing on storage and security, made what I find a clever move in getting married. There hasn´t been any M&A wave whatsoever.

    To answer your question properly, I think that Checkpoint is an extraordinary company. Could you believe that they were founded in 1993 in a small office in Ramat Gan (in the outskirts of Tel Aviv)? Though Checkpoints regularly acquires innovative start-ups in the security business, I don´t see them expanding into storage. The reason for my stance is that Checkpoint is already involved in hardware and software manufacturing devised to enhance Internet protocols and network securities. This market having been booming for a few years now, I wouldn´t understand why they would go for the hassle of integrating a storage company that isn´t a core business.

    But Checkpoint will, as I see it, definitely pursue its technological capabilities strategy by purchasing rather small, extremely innovative security start-ups with highly skilled managers in the future.

    By Blogger Jeremy Fain, at 7/05/2006 12:04:00 PM  

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