$137.8B U.S. ad spend for top 200 advertisers
Most recently, Cisco Systems in January announced it has agreed to acquire IronPort Systems, an anti-spam and spyware protection services company, for $830.0 million in cash and stock.
The networking equipment company said the acquisition is a natural extension of its existing security products, which include threat mitigation, confidential communications, management and policy control.
In fact, some observers say the major consolidation in the space is over.
"It's pretty much done," said Peter Firstbrook, research director at technology researcher Gartner Inc. However, he speculated CA might be interested in doing a deal. "They don't have anything is this area," he said, adding that IBM Corp. might enter the space, too, but has not yet shown any interest.
Gartner projected that mergers and acquisitions in the e-mail security industry will reach their zenith in the next 12 months.
E-mail security continues to spark interest because, by most accounts, spam is worse than ever. Last year, there was a 147% increase in spam rates, according to Postini Inc., an e-mail security company.
A fundamental shift in the nature of the threat environment changed in the last six months as well. "Organized crime coming out of Eastern Europe has entered this world," said Dan Druker, exec VP at Postini. He said criminals perpetrate viruses and unwanted attacks—botnets—that infect PCs, which in turn become new sources of spam.
Cisco has certainly been made aware by a growing level of concern from its client base.
"Recently customers have been expressing increasing concerns around securing data and content for applications," said Jeff Platon, VP-marketing at the Cisco Security Solutions Group.
"Our customers are asking for more integrated products and services," said Craig Spiezle, director of online safety strategies at Microsoft.
He said he is also very involved in partnering with other providers, including competitors. "We do a lot of partnering with [Cisco, for example] as well as IronPort. We'll continue to collaborate in these areas. We share a lot of same customers, and we need to assure the interoperability of these technologies."
That includes getting together at events such as the annual Authentication & Online Trust Summit, which will take place in Boston in April and brings together all the major e-mail marketing stakeholders, along with such groups as the Interactive Advertising Bureau and even the long arm of the law—the Federal Bureau of Investigation, the Secret Service and the Federal Trade Commission.
JF Sullivan, VP-marketing at Habeas Inc., an e-mail reputation services provider, said that larger companies have been interested in anti-spam solutions for some time, but their reasons for concern have evolved to focus more on their desire for reputation systems.
"Cisco didn't need an anti-spam vendor and they didn't need a distribution channel," Sullivan said. "They wanted Senderbase [Ironport's reputation product]. They wanted the underlying reputation network that IronPort spent four and a half years building."
Promise of Fewer platforms
"The more consolidation and the more people using the `good' software, the better it is for marketers," Firstbrook said. Firstbrook put together Gartner's Magic Quadrant for Email Security in September, ranking Cisco, MessageLabs, Microsoft, Postini, Secure Computing Corp. and Symantec Corp. in his "leaders quadrant."
"I see [consolidation] as a very positive and encouraging move," said Jeanniey Mullen, senior director of e-mail marketing at OgilvyOne Worldwide, whose clients include American Express Corp., Cisco and IBM.
"What's been happening with e-mail for so long is that there have been so many different companies trying to develop approaches to fixing the same problem," she said.
A profusion of platforms benefitted spammers, who were able to exploit loopholes in the systems and out-maneuver legitimate marketers, she said.
Mullen said she looks forward to a smaller number of vendors and the promise of standardization.
"We'll be able to use a smaller number of solutions to help us do more in-depth detection of what the trends are and, hopefully, come together with one unified solution," she said.
Some of the most attractive acquisition targets, according to some industry watchers, are MessageLabs, MX Logic and Postini.
Mullen, who heads a group called the EMail Experience Council, predicted that the major e-mail security vendors will get very cozy over the next 12 months to solve the security issues, and that in turn will spur further deal activity.