Deal: RSA buys PassMark Security

RSA got out the checkbook again over the weekend and bought PassMark Security in a deal worth about $45 million. For this they will get about $4-5 million in additional top line revenue this year. So about 10x sales, which seems a bit pricey or does it?

What PassMark has is a number of banks that use their "two-way" authentication, which uses both the consumers location and password to authenticate the user to the bank. But also has what is called a "PassMark" on each web page, that is unique to the user and authenticates the bank to the user. Once the user is trained to expect the passmark, this is an effective anti-phishing technique.

So what? A good amount of anti-spam and anti-phishing technology is driven by data. The more messages and/or transactions you see, the tighter your detection tolerances and the quicker you can react. PassMark doesn't really give RSA any technology they didn't already have with Cyota, but it gives them more breadth, more data and more customers.

Last week, when I went over RSA's earnings release (link), one of my conclusions was that now with the Cyota technology RSA now has a reason to talk to larger financials about more than just token renewals. Now they are broadening their base of financial customers and can upsell the PassMark customers to a full suite of Cyota stuff (say that 10 times fast).

Clearly RSA has seen the light about consumer authentication, especially in the financial institution and is bent on not giving that business directly to Vasco anymore. I'm the kind of guy that likes a good fight and we seem to have one. We'll see how Vasco reacts to protect their consumer franchise (especially outside of the US), while they continue trying to attack RSA's base in the enterprise.

Evidently, RSA has taken some aggression pills because this is another solid move to broaden the foundation and get a new wave of customers to chase. And more importantly, they did it preemptively before someone like Vasco or ActivIdentity got to it first.