Why the clock's ticking for Check Point
Check Point's proposed acquisition of Protect Data for $586 million serves a couple of purposes.
The acquisition propels Check Point into the rapidly growing data privacy business with mobile-device encryption. Lots of dollars are flowing into this market. According to Enterprise Strategy Group, 28 percent of enterprise organizations have already deployed desktop and laptop encryption tools. Another 43 percent are either planning to deploy or are interested in doing so.
What's more, the deal provides an add-on for the new ZoneAlarm Internet Security Suite. Check Point knows that it will face tough, entrenched competitors in the PC security business. As such, it plans to use encryption to differentiate its product from leaders McAfee and Symantec, as well as Microsoft.
This is a shrewd move by Check Point. It immediately puts the company into a leadership position in the white-hot desktop encryption market. But before anyone gets too giddy, the mobile-device encryption market opportunity is about to get a lot more competitive, and Check Point will soon be surrounded by vendors also offering attractive hardware and software options.
On the hardware side, Seagate Technology recently announced its DriveTrust strategy and is encrypting Momentus 5400 FDE.2 drives. For about the same price as adding an encryption tool (roughly $100 to $200 per desktop), you will soon be able to buy a new PC with transparent high-performance encryption built into the hard drive. No adding software, changing user behavior or training the help desk. Also, it comes with added goodies, courtesy of the soon-to-be-ratified Trusted Computing Group storage specification. This no-fuss solution will be very appealing to new PC buyers.
As for software, Microsoft's Vista Ultimate and Vista Enterprise editions come with Windows BitLocker full disk encryption at no charge. As my father-in-law once said to me, "Why buy the cow when you get the milk for free?" As Vista gains popularity, lots of businesses will eschew the add-on encryption cow.
What about mobile-device encryption for smart phones, PDAs and wireless devices? Great idea, except that no one is buying it today. Yes, this market will develop in the future, just in time for low-price crypto drives and utilities. There is no money for Check Point here.
Check Point just bought a leadership position in a rapidly changing market. Great start, but it needs to execute quickly or risk getting eaten alive by technology advances, free Windows utilities and market forces. Since I've yet to see Check Point move quickly, I'm bearish on the long-term prospects of this deal.