Tuesday, May 15, 2007

Verizon/CyberTrust Deal is a Smart Move

Long long ago, when we were starting Authentium, we met with a company called Baltimore Technologies, which at that time was looking for a suitor. A distant competitor to VeriSign, as a public key encryption vendor, Baltimore never quite made it out of the gate with the same amount of "oomph".

The assets of Baltimore Technologies eventually ended up pooled with Ubizen, a European MSSP, TruSecure, a professional services and consulting company, and BeTrusted, which became the owner of Ubizen in September of 2004. Then the whole thing eventually ended up coming together under the CyberTrust banner, along with ICSA (formerly the International Computer Security Association) Labs.

The resulting grouping of these technologies has been well-managed and developed, and now presents a strong, unified offering. Authentium is one of several security companies that utilizes the certification services of ICSA Labs (according to InfoWorld, ICSA Labs certifies 95% of the security applications offered on the US market today) .

So what does this merger/acquisition mean for telecoms, security and SAAS - and Verizon shareholders?

Firstly, it means one more security software company just got taken off the market by a large company that isn't a core security software developer, but a service-based infrastructure company.

Secondly, it shows telcos are serious about identity management. This combination of the technologies available within the CyberTrust umbrella will go a long way towards solving Verizon's identity management problems - and enable them to better create a solid platform for the services Verizon is already offering, or planning to offer.

Thirdly, it shows service providers are smart - and focused on the fact that security issues are becoming much harder to solve than they used to be. Like Authentium partner BT's acquisition of Counterpane before it, this deal will give Verizon the ability to support computer forensic analysis services and technology certification.

Finally, it shows that even with only a small amount of the market penetrated, SAAS is here to stay. This acquisition further confirms what we have been saying for years: within ten years, 100% of security software is going to end up as an embedded service within your data access provider's business offerings.

There are several reasons. The two most obvious reasons are that telcos already have service-based billing platforms and customer service departments. But the big reason I think they are going to win with these mergers is the combining of software-based IP with their service-based sales forces - and loyal customer bases.

In my experience, the telcos have always had pretty impressive dynamic sales departments, and far stronger ties to large customers than software vendors.

Verizon shareholders should rejoice. This is a smart deal.

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