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Risk

10/9/2007
09:21 AM
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Websense Emerging as Viable Security Supplier

Are you a bit insecure about your security supplier? In this highly volatile marketplace, Websense is emerging as a vendor that medium and small businesses may want to take a closer look at.

Are you a bit insecure about your security supplier? In this highly volatile marketplace, Websense is emerging as a vendor that medium and small businesses may want to take a closer look at.The security market has been shifting from a time when a company could survive, and even thrive, with one strong product to an era where more and more businesses are installing broad, integrated product suites. To build its portfolio, Websense spent more than $400 million to purchase rival SurfControl.

Websense has been growing its business by delivering software that detects spyware, phishing, and other types of malware. SurfControl developed one of the first parental control tools for filtering unauthorized content from end users, has recently been gaining momentum from its email filtering software. On paper, the SurfControl purchase makes sense because both companies focus on the medium and small business market. Combined, the two companies have nearly 50,000 customers worldwide.

Size is becoming more and more important as the market evolves. In fact, the SurfControl acquisition is Websenses second; the company acquired data leak prevention vendor PortAuthority in January for $90 million. The person behind the aggressive moves is Gene Hodges, who helped to build McAfee into one the security industrys leaders. He joined Websense in an abrupt and surprising move in January 2006 after helping McAfee acquire different companies and meld them into one of the security industrys top suppliers. He claimed that the companys technology lured him but the ability to purchase 1.2 million shares of stock at a reduced rate probably also played a role in his decision.

While Websense seems to be making some sound business decisions, the company does face challenges. The company has a broader security line but does not match those of more experienced suppliers. How the different products will be integrated is a concern to customers. If SurfControl customers think their product will be downplayed or discontinued, they will move to another vendor. Websense, which is based in San Diego, and SurfControl, which was based in the UK, have very different corporate cultures, which have to be integrated.

While it is growing, Websense is still a small player in the security market. Websense posted $180 million in revenue last year while SurfControl generated $114 million in revenue. The firm is banging heads with suppliers, such as Symantec, which generated $1.4 billion in its last fiscal quarter. In sum, deciding to rely on Websense as a companys primary security supplier does represent a gamble, but not an enormous one because the company has experienced managers who are pushing the firm in the right direction.

Do you now use Websenses products? What is your impression of them and the company? Given the market volatility, how comfortable, or uncomfortable, do you feel about your current security supplier?

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