John Katsaros

Seething

In last week's press release announcement of Diane Greene's sudden departure you could almost feel Joe Tucci's tension jumping out of the page. Tucci, who has multiple roles as the chairman of VMware's board as well as chairman, president and CEO of EMC, has had to sit back and watch EMC's share price drop -- being pulled down by VMware -- since Microsoft launched Hyper-V. That's because EMC owns such a big piece of VMware which, in turn, accounts for a significant amount of EMC's current valuation. Until VMware's IPO last year, EMC's stock price was fairly typical for a large high tech company. But for the past six months EMC's stock price has been as volatile as they come. You can't blame him for wanting to get things under control.

End Game?

The Information Leak Prevention infrastructure sector makes you scratch your head and wonder how this whole thing plays out in the long run. Last year we wrote a series of reports on ILP/DLP technology and basically concluded that, while these products do interesting things, customers wanted more complete offerings that delivered important business value and that this market needed more time before it would ignite. Last week's acquisition of Tablus by EMC's RSA division seems to underscore this and may even point out that ILP technology is better viewed as extending the functionality of larger information management subsystems. Websense is taking this approach by integrating its recently acquired Port Authority product within a broader framework. The value of the EMC/Tablus transaction wasn't announced, which more often than not is a disappointing signal. Couple that with the ensuing discussions pointing out that Vontu's 2007 revenue number may be closer to $25M than to $50M has us all wondering about the short term health of this sector. With about 20 plus startups in this sector and more than $500M in venture investments, we're all expecting an exciting business to develop. As we've done before in other sectors, we'll be keeping score as newcomers enter into our DLP/ILP Hall of Fame.

 

DLP/ILP Hall of Fame

Date	Acquiree	Acquirer	Amount	Estimated Sales Multiple
10/06	Onigma Ltd	McAfee	$20	?
12/06	Port Authority	Websense	$90	20x+??
8/07	EMC/RSA	Tablus	???	???
Total			$110+M

Thanksgiving at the Melvins

We caught up with Network Intelligence's EVP of Marketing and Business Development Jim Melvin shortly after EMC acquired the company at the end of last month.  Jim was instrumental in assisting Network Intelligence in turning the corner from a second tier SIM player into a contender which eventually caught EMC's interest as EMC expanded its enterprise security portfolio.  Jim was too polite to comment on the fate of the remaining independent SIM companies (it's our belief that with Cisco hitting on all cylinders with its MARS product -- as of August Cisco brought on 2200 new MARS customers -- it's going to be difficult for the independent startups still left in the space) but there still may be a few large systems companies that view SIM as an interesting form of product line extension.  Jim's view of the acquisition is "right time, right company" -- EMC came along as Network Intelligence was reaping the benefits of its new strategy.  If you're counting, the latest scorecard for SIM acquisitions is below.  Jim's brother Jeff is the VP sales at Network Intelligence so it's Thanksgiving dinner at their house this year!