Encryption specialists: To buy or not to buy?

A look at market conditions tells you why it made sense for security widget maker SafeNet to buy Ingrian, and for Symantec to partner with GuardianEdge.

A few weeks ago there were two interesting announcements involving encryption technologies. First, SafeNet acquired application and database encryption leader Ingrian while Symantec announced that it will partner with GuardianEdge to provide Full Disk Encryption (FDE) for PC security .

Why did SafeNet buy Ingrian rather than simply partner? Because SafeNet has made its mark selling security widgets not security solutions. This business model holds less appeal when large organizations fold security into their global governance, risk management, and compliance requirements. With Ingrian in hand, SafeNet can compete on these kind of enterprise deals and become a more strategic vendor to customers.

SafeNet-Ingrian is pretty straightforward, but why wouldn't Symantec simply buy GuardianEdge? Symantec certainly has the money and the industry precedent was set when Check Point purchased PC encryption vendor PointSec while McAfee grabbed SafeBoot.

Symantec looked at the market and saw a very short runway to make money. Hardware-based FDE is clearly on the horizon, led by Intel, Hitachi, and Seagate Technology. Pretty soon, laptops will ship with encryption already baked in, so the market for software solutions can be measured in the 12-to-24-month timeframe. With so little time to make an acquisition accretive, Symantec decided that partnering with an industry leader was a better business decision.

There are a lot of encryption and key management start-ups available and I expect a lot of acquisitions, partnerships, fire sales, and bankruptcies over the next few years. One way or another, users want to encrypt their confidential data sooner rather than later. Which vendors win and which lose is another story.

 

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