Yep, even in a crappy macro environment, there will always be sectors that are doing well. As I pointed out during the Incite Redux series, endpoint encryption is certainly one of them. The rising tide definitely lifts all boats. But more importantly, the second part of the Incite is all about the consolidating market.
We saw a bunch of deals happen in this space last year and things went quiet for a little while. Until this morning, that is. Sophos has announced a deal to acquire Utimaco for 217 million Euros. That's about $341 million. Utimaco did a touch under 50 million Euros last year. Their last quarter was 14.4 million Euros, growing about 25% YoY.
Interestingly enough, Sophos' offer was literally a 92% premium to Utimaco's trading price on Friday. If you look at 30 and 90-day moving averages, the premium is a bit less, but it's still a HEFTY premium. Seems the German investors didn't quite get the need for endpoint encryption.
It's a big check, but a necessary check to write. Sophos wants to play on the big stage with Symantec, McAfee and Trend. They need to control the technology because it's a feature of a broad endpoint suite. Yes, it's a FEATURE. But a necessary feature. The endpoint is all about how much crap you can stuff into the bag now, and that means it's not a market for start-ups. It's a big is the new small market.
It also makes Symantec's decision to OEM GuardianEdge, as opposed to either acquiring them or someone else, that much more perplexing. Unless they built a pre-negotiated acquisition price into the OEM deal, they are seeing their price rise dramatically because it's not if, it's when they need to acquire this technology.
So all of you end users out there looking at 2H renewals for your endpoint suite. Use these deals and the need for endpoint encryption to your advantage. If your incumbent doesn't have the technology, poke them in the eye and force big price breaks. If they do, poke them in the eye and make the bundle it in for little to no additional price (which is effectively a big price break).
This is a competitive market folks, which means at a minimum you should be poking your vendor in the eye and also getting a big price break. Now is not the time for inertia or brand loyalty.
Photo credit: "Manure for sale" originally uploaded by sloejoe