Symantec has had some presence in the security services market for a number of years, but with only a relatively limited impact on its revenues. It has stated its intention to grow the services proportion of its business, particularly as services are evolving into the fastest growing security market and outpacing software and appliances in terms of growth. With its acquisition of MessageLabs for $695m in cash and its launch of the Symantec Protection Network (SPN) in the US, Symantec has made a significant commitment to the security software-as-a-service (SaaS) market and positioned itself well to benefit from the transition to the service-based delivery of security solutions.
The breadth of Symantec’s offering, and its intention to offer online backup services, remote access and potentially data loss prevention (DLP) capabilities as a service will allow it to complement MessageLabs’ incoming content filtering technology. Furthermore, Symantec will be able to use MessageLabs’ strong presence in the EMEA market and its service delivery infrastructure to extend the reach of its services and allow it to offer its customers a broader range of delivery methods, and mix and match services and software solutions. Symantec is likely to benefit from up-selling its solutions to MessageLabs’ 19,000 customers, as well as extending its reach within the SME sector through offering more flexible pricing models and lowering the entry price point for more advanced security solutions.
In terms of integration, Symantec is likely to rapidly integrate MessageLabs and re-brand it as a component of its wider SPN offering. The two companies have a history of co-operation and have been long-standing partners (Symantec’s BrightMail and traffic shaping technology are used to power some of MessageLabs’ services), and this history should facilitate the integration. The rapid integration will also allow Symantec to use the same infrastructure of security operation centers to provide different classes of services for consumers, SMEs and large enterprise customers, thus reducing costs and increasing its ability to expand their customer base rapidly using the same service provision infrastructure.
Although this move towards SaaS is likely to benefit Symantec’s bottom line, it also carries risk with regard to its channel partnerships and existing license revenues. Although this risk is unlikely to significantly threaten Symantec’s revenues in the long term, it needs to maintain a fine balance between services, appliances and software, and enable customers to combine these delivery methods according to their requirements. This would ensure that customers who are more reluctant to use a SaaS model will continue receiving the same solutions through on-site software and appliances.
With this acquisition, Symantec has taken a leadership position in security SaaS, which will allow it to maintain revenue growth in the long term. However, Symantec will need to tackle the challenges around its nascent SaaS channel competing with its other channels to market. To achieve this, it must allow its extensive partner network to benefit from the roll out of SaaS. In addition, it must also give its customers the highest possible level of flexibility with regard to mixed-mode deployments that include services and other components from Symantec’s portfolio.
