Acquisitions in the News

Cisco Systems Inc., announced it is buying Jabber Inc. while McAfee Inc. said it was purchasing Secure Computing Corp. In other news, Quest Software Inc. acquired NetPro Computing Inc.

Focal Points:

• Cisco stated it intended to buy Jabber, the Denver, CO-based provider of presence and messaging software. Financial terms were not disclosed. Cisco expects the deal to close in the first half of Cisco's fiscal year 2009. Jabber's 50 employees will join Cisco's Collaboration Software Group, a division of the company's Software Group whose major businesses include the IOS network operating system, network and service management, Unified Communications and Collaboration (UCC) solutions, policy management, and SaaS offerings. Jabber will help bolster Cisco's UCC strategy versus Google Inc., IBM Corp., Microsoft Corp. and others. Jabber, whose core technology is the open source Extensible Messaging and Presence Protocol (XMPP), enables the integration of presence data across different devices, users and applications, allowing multiple instant messaging to "talk" to one another. Thus, Jabber users can send an instant message to anyone using AOL LLC AIM, Google Talk, IBM Sametime, Microsoft Office Communications Server, and Yahoo! Inc. instant Messenger.
• Security software vendor McAfee revealed it had agreed to purchase network security specialist Secure Computing for approximately $465 million. Secure Computing's products include Webwasher, a tool for filtering corporate Web traffic, IronMail encrypted mail servers, Sidewinder firewall appliances and SnapGear virtual private network devices. McAfee expects to expand its security-as-a-service offer and to sell more products and services to Secure Computing's 22,000 customers worldwide. McAfee projects total network security sales of about $500 million for this fiscal year. In 2007, McAfee's revenue from all product lines totaled $1.3 billion. According to officials, the acquisition doubles revenues from network security and helps it build on its vision of being the largest dedicated security company and an industry leader in Security Risk Management. In August, the company purchased of Reconnex Corp., a provider of risk management tools, for $46 million.
• Quest Software announced that it has acquired NetPro Computing, a leading provider of Microsoft infrastructure optimization solutions, in a cash transaction valued at approximately $78.7 million. The acquisition allows Quest to extend its product portfolio to deliver a comprehensive set of products to manage complex Microsoft infrastructures. The company believes it can now provide robust solutions to better migrate, manage and secure Microsoft Active Directory, Exchange, SharePoint and SQL Server environments. Key members of NetPro’s management team will remain with Quest as the two companies work to consolidate operations. A phased integration plan to consolidate the two companies’ Microsoft development, sales, marketing and services organizations to best serve Quest and NetPro customers is being implemented, according to company executives. Products from both companies will continue to be developed, marketed, supported and sold while technology roadmaps and product integration points are further defined. Officials state the company expects the technology roadmap will be disclosed on or around October 15, 2008.

Experton Group believes vendors must create comprehensive, integrated software and services solutions so that they can deliver the value proposition that users are now demanding. IT organizations are winnowing down their number of preferred vendors; thus, vendors must be able to demonstrate they can be the solution and service provider capable of meeting a wide-ranging set of needs. The moves by Cisco and Quest help reposition them while McAfee's acquisition extends its offerings and enables it to leverage a broader customer base. Cisco expects to be going head to head more against the likes of IBM and Microsoft with its UCC strategy and needs a wider portfolio to garner a larger market share. IT executives should understand the changing competitive landscape and the impacts of Cisco (and the others) moving up the solution stack upon the enterprises' architectures, alternative architectures, and strategic vendor partnerships.