Microsoft to drop $320 million in cloud security company Adallom -- report

The acquisition would represent further investment by Microsoft in the cloud as it looks to make good on Satya Nadella's promise of being a "mobile-first, cloud-first" company.

Don Reisinger
CNET contributor Don Reisinger is a technology columnist who has covered everything from HDTVs to computers to Flowbee Haircut Systems. Besides his work with CNET, Don's work has been featured in a variety of other publications including PC World and a host of Ziff-Davis publications.
Don Reisinger
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Microsoft CEO Satya Nadella talks about his company's future plans for the cloud at a press event in 2014. Seth Rosenblatt/CNET

The cloud is a key component in Microsoft CEO Satya Nadella's strategy for the future, and now he may want to secure it with help from an Israel-based startup.

Microsoft plans to acquire Israel's Adallom for $320 million, the Calcalist financial news service reported on Monday. The acquisition would be just the latest Israel-based startup Microsoft would acquire. Last year, the company picked up security software software developer Aorato. In May, Microsoft acquired stylus technology maker N-trig for a reported $200 million.

Neither Adallom nor Microsoft immediately responded to a request for comment on the reported acquisition.

Adallom provides back-end security services to companies that run cloud-based offerings. Adallom's service monitors a cloud platform's users, handles data-sharing, and monitors events that could represent hacking attempts. The company, which has several major competitors, including IBM and HP, has 80 employees in offices across Israel and the US.

It's unclear what Microsoft may have planned for Adallom and whether the company will allow the Israel-based startup to continue to operate independently or build its technology into its own cloud services, like Azure and Office 365. If Adallom is allowed to operate independently, Microsoft would find itself a service provider for companies that may be using competing cloud services, including Google Apps, a business suite that includes Gmail and Google Docs, as well as storage provider Dropbox. Adallom also works on customer-relationship management service Salesforce and Microsoft's own Office 365.

Regardless of Microsoft's reported plans, Adallom seems to be a logical acquisition in the face of Nadella's own plans for his company. On several occasions over the last year since he became CEO at Microsoft, Nadella has stressed that Microsoft must be a "cloud-first" company.

In a leaked memo to employees in June, Nadella emphasized his commitment to the cloud, saying that he wants his company's efforts to "be powered by our cloud platform -- a cloud that provides our customers faster time to value, improved agility and cost reduction, and solutions that differentiate their business." While Nadella was quick not to discount the importance of Microsoft's core software businesses, namely Windows, the steady drumbeat of the cloud and its importance is resounding in Redmond.

Still, the reported acquisition comes in the face of one of the biggest failed acquisitions in the company's history. Earlier this month, Microsoft announced that it would write down $7.6 billion on its acquisition last year or Nokia's Devices business and would be forced to lay off 7,800 people. Most of the positions being cut will come from the Nokia handset-making division. The news came just weeks after Microsoft announced that Stephen Elop, the former CEO of Nokia who headed Microsoft's devices group, was leaving the company.

Microsoft declined to comment.