EMC to buy security vendor RSA

Posted on August 01, 2006

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By Kevin Komiega

EMC is in the process of acquiring data security software maker RSA Security for approximately $2.1 billion. EMC plans to integrate RSA’s identity management, encryption, and key-management technologies with its entire line of storage hardware and software products.

“Our stated goal is to grow five of our business areas to one billion dollars each-VMware, content management, resource management, virtualization, and now security,” says Joe Tucci, EMC’s chairman, president, and CEO. EMC had a small amount of revenue in the security space, but has high expectations for its now formidable security portfolio. Tucci says that EMC’s security business will start at a run rate of about $500 million in 2007.

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RSA’s products run the gamut from smart cards and USB authenticators to enterprise-class identity management and access control technologies.

Rob Sadowski, director of marketing for EMC’s security division, says the acquisition will allow EMC to ensure its products aren’t the source of any vulnerabilities in the data center. “We will take RSA’s authentication, authorization, and cryptography and build those capabilities into our storage platforms, backup software, and archiving software. We are going to make it as seamless and transparent to users as possible. Customers don’t want to buy a box to secure another box,” says Sadowski.

EMC launched a new security strategy last May with a focus on securing data through its lifecycle. RSA’s technology, specifically its encryption and key management tools, will soon serve as the core of EMC’s security portfolio, according to Sadowski.

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RSA’s technology is widely considered the de facto standard in secure identification and authentication, but EMC still has a long road to travel before it builds a $1 billion security business, according to Brian Babineau, an analyst at the Enterprise Strategy Group. According to Babineau, EMC’s investments in the security market are far from over. “The investment in RSA is a wise move, but it is going to be a lot more expensive than the $2.1 billion that they spent. Information security is going to grow and EMC still needs to make significant investments,” he says.

Babineau believes EMC must now seek out more acquisition targets in the security space to take advantage of its newly acquired network of channel partners and the existing RSA customer base. “EMC will need to find some smaller acquisitions that they can tuck into this brand and start to innovate with products they can put into the channel,” says Babineau.

RSA will operate as EMC’s Information Security Division, headquartered in Bedford, MA. RSA’s president and CEO, Art Coviello, will become an executive vice president at EMC and president of the division.

EMC will release more details on its timetable for product integration later this year.


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