Dell's SecureWorks buy smells like a small-business play

Newly acquired security company has enterprise clients, but SecureWorks may help Dell target small and midsize businesses

Dell's acquisition of managed security services provider SecureWorks puts the company on track to become a one-stop shop to small and medium-size businesses for hardware and services.

Announced earlier this week, the acquisition could be seen as playing catch-up with rival Hewlett-Packard, which has undergone its own midlife transformation, picking up security companies ArcSight in October, Fortify Software in September, and TippingPoint -- as part of its 3Com acquisition. However, whereas HP aims squarely at enterprise customers, Dell's move will help turn it into a more complete provider to small and medium businesses, according to Josh Corman, research director at the 451 Group, an analyst firm.

"They are basically saying, 'You are already buying your servers and the laptops from us, so we will help you with compliance as well,'" Corman said.

Dell put the focus squarely on the small-to-medium-size business market in July, when the company announced a partnership with SecureWorks to "provide a portfolio of powerful security services to help midsize businesses improve their security posture, achieve their regulatory compliance, and lower IT costs by offloading day-to-day security monitoring, management and remediation to a trusted security services provider, working as an extension of a customers' IT staff," according to a statement issued by the companies.

SecureWorks also boosts Dell's presence in cloud services. In September, HP outbid Dell for data-storage cloud provider 3Par, paying about $2.4 billion or more than 80 percent higher than Dell's initial bid, according to reports.

Although terms of the latest deal were not announced, the 451 Group estimates that the acquisition is likely valued between $500 million to $550 million, or about four times SecureWorks' $120 million revenue in 2010. For a managed security service company, which relies heavily on staff expertise rather than deep intellectual property, such a multiple is quite good, Corman said. SecureWorks' initial contribution to Dell's $8 billion in service revenue will be small.

This article, "Dell's SecureWorks buy smells like a small-business play," was originally published at InfoWorld.com. Get the first word on what the important tech news really means with the InfoWorld Tech Watch blog.

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