A year after SecureWorks acquisition, SonicWall deal strengthens Dell position as security provider
Dell appears to be doing a nice job playing catch-up in the security market with the acquisition of firewall/UTM vendor SonicWall, following its purchase of SecureWorks, a leading MSSP, just over a year ago. Competitors IBM and HP have been actively acquiring and integrating security products and services into their portfolios, but Dell was lagging somewhat prior to the SecureWorks deal. That acquisition gave Dell some instant credibility as a provider of security services and strengthened its hand selling cloud services.
Now, Dell is positioned to offer both a wide range of security services and network security products to both SMB and, potentially, large enterprise customers. Long known primarily as a unified threat management (UTM) company, selling into small and medium-sized businesses, SonicWall entered the enterprise market early in 2011 with the announcement of its unabashedly named SuperMassive line of next generation firewall (NGFW) appliances.
The strategy to branch into the enterprise network security was an interesting move, enabled, perhaps, by investment firm Thomas Bravo, which purchased SonicWall in 2010 for a hefty $717 million. (Bravo promptly took SonicWall off the public trading market, where it had been since 1999). The enterprise firewall market has been disrupted in recent years with the emergence of Palo Alto as a leading player, creating a fluid environment that might give a company such as SonicWall an opportunity to move up from its fairly strong position among SMBs.
The jury is still out on how successful the SuperMassive initiative may prove, but Dell’s brand and resources should help push it forward if the new owners decide to move in that direction. Certainly, entry into the UTM market is sufficient justification for buying SonicWall. IDC estimated UTM revenues at $2 billion in 2010, with a CAGR of 13% through 2014. TechNavio predicts a $3.6 billion market by 2014 and a CAGR of 15.8%.
So, UTM is big business. In addition to SMBs, UTMs are becoming increasingly important in branch offices and other satellite locations for larger enterprises. That means success selling SuperMassive appliances to larger organizations could spur additional sales, with the big boxes in headquarters and large data centers, and smaller UTMs in distributed locations.
SonicWall is probably the right fit for Dell, which reports the new acquisition did about $260 million in revenue last year. The purchase price was not disclosed, but analysts reportedly peg the price at between $1 billion and $1.5 billion, giving Thomas Bravo a nice ROI. Channelnomics’ Larry Walsh reports that Dell evaluated two other UTM vendors, WatchGuard Technologies and Fortinet, generally regarded as the market leader, before acquiring SonicWall. Most major firewall vendors have at least some presence in the UTM market.
The SonicWall and SecureWorks acquisitions have moved Dell into a strong position as a provider of security services and network security products — in effect, giving it a much more complete story to tell perspective business customers.