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HP Will Buy ArcSight To Move Beyond Perimeter Security
HP Will Buy ArcSight To Move Beyond Perimeter Security

By Jennifer LeClaire
September 13, 2010 1:55PM

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Hewlett-Packard plans to increase its security focus by purchasing security and compliance firm ArcSight for $1.5 billion. HP sees a need for better tools as enterprises give employees, partners and customers more access to data. ArcSight CEO Tom Reilly sees the deal as creating an integrated security platform for HP to address security risks.
 


On the heels of Intel's acquisition of McAfee, Hewlett-Packard has announced plans to acquire another security industry player. HP will pay $1.5 billion, or $43.50 per share, in an all-cash deal for security and compliance firm ArcSight.

This is HP's second security-related acquisition in as many months. In August, HP acquired security assurance company Fortify Software. HP is betting its latest in a string of acquisitions will beef up security, lower the risk, and streamline compliance at a lower cost for its customers. That's a tall promise, but one that HP may be getting closer to with the ArcSight buy.

"From a security perspective, the perimeter of today's enterprise is porous, putting enormous pressure on clients' risk and compliance systems," said Bill Veghte, executive vice president of HP's Software and Solutions business. "The combination of HP and ArcSight will provide clients with the ability to fortify their applications, proactively monitor events, and respond to threats."

Beyond Perimeter Security

As HP sees it, enterprises are facing a challenge that its combined security portfolio can solve: Companies need to give employees, partners and customers more access to applications, services and information amid escalating threats and ever-growing complexity and regulatory challenges.

HP said adding ArcSight to its portfolio gives clients a 360-degree view of IT operations, broader security and compliance tools, the ability to detect threats and risks by correlating both activity and state changes in real time, and a feedback loop between build, manage and monitor to ensure that enterprises remain secure.

Tom Reilly, president and CEO of ArcSight, went so far as to say the acquisition will create a new type of security solution for the modern enterprise. The result of the merger, in his view, is an integrated security platform that goes beyond identifying risks to remediating them. "In a world where perimeter security is no longer enough," he said, "businesses need this holistic approach to securing their networks, applications and sensitive data."

Seeking Differentiation

Charles King, principal analyst at Pund-IT, said HP's latest acquisition indicates the growing importance that most vendors are putting on security, and specifically delivering integrated security. Unlike IBM and Oracle, HP does not have proprietary security platforms that were developed in-house, and appears to be hedging against that disadvantage with its recent security acquisitions.

"As we move forward toward a future where IT hardware is more and more commodity-based -- and I think the industry is headed there over the long term -- the question becomes this: If everybody is building their servers out of the same basic components, how do you differentiate the value add and the competitive advantage that your products offer?" King asked.

"I think we are seeing a rush toward proprietary security features that can be tailored toward HP customers with this deal," he said. "I suspect we will see more security acquisitions by other firms and, over time, other sorts of enhancements that will either be developed in-house or purchased in future acquisition-buying sprees."
 

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Al Hilwa, IDC:

Posted: 2010-09-13 @ 5:03pm PT
The fact that these acquisitions are happening after Mark Hurd left might suggest that he had not been in favor of such expansive acquisitions, but more likely it is a just a matter of timing as such acquisitions take time to brew, and so likely the discussions started prior to his departure.

We are in a very acquisitive and highly consolidative era right now in the industry, for various reasons. Aside from technical reasons such as valuations and opportunity costs, as the number of big technology firms consolidate, the battle for what is left heats up and they begin to see each other as competitors even though they are not directly playing in each other’s business.

It is all about envisioning what the market will look like in a few years, which has become harder, because of the multiple disruptive forces at play, such as the explosion of cloud and mobility.

One scenario I see is that Oracle is likely to embark on an a second wave of large acquisitions under Mark’s leadership, potentially oriented at taking it to completely different places, perhaps even following a more diversified portfolio similar to IBM and HP.

We will probably get more insight on that from the body language or indeed what Larry Ellison might say at Oracle Open World.

Al Hilwa
Program Director
Applications Development Software
IDC – Seattle



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