Could Sygate Get Snapped Up?

SAN FRANCISCO -- Vendors of software that can control security devices from a range of suppliers are attracting a lot of attention at this years RSA Conference, and startup Sygate Technologies, Inc. could be a potential target for one of the major security players, according to analysts.

Sygate, along with a handful of other companies, offers an emerging technology known as Network Admission Control (NAC). Essentially, this is a software that enforces security policies across a range of devices such as firewalls and switches. The technology can also coordinate anti-virus, spyware, and denial-of-service products from a number of vendors.

So, why is this so important? Phebe Waterfield, security solutions analyst at Yankee Group believes that users face a major challenge coordinating a mish-mash of existing security products; hence the need for a technology to bring them all together. “There’s so much disparate software at the endpoint that we have bought to combat the (security) threat,” says Waterfield. “NAC is going to be a big thing this year.”

To make matters worse, the advent of remote working means that businesses face the headache of securing vulnerable devices, such as home computers or even PCs in an internet café. ”I could see why Sygate could get bought, because there is a lot of interest in endpoint security,” says Jon Oltsik, senior analyst at the Enterprise Strategy Group.

Pete Lindstrom, analyst at Spire Security, agrees. “Sygate I think is a good prospect,” he says. “They are actively generating revenue and they are getting a lot of good feedback from folks.”Sygate’s software works by installing an agent on the endpoint device. If the device is ‘unmanaged’, such as a PC in an internet café, the vendor uses what's described as a ‘virtual agent’ to check the machine and ensure that no information is left behind once the user has logged off.

So, who could potentially be in the market for Sygate? Two names mentioned by analysts are Cisco Systems Inc. (Nasdaq: CSCO) and Juniper Networks Inc. (Nasdaq: JNPR). Cisco is currently fleshing out its own NAC strategy, and both firms seem inclined to expand their burgeoning security portfolios through acquisition (see Cisco's Security Spree Continues and Juniper Buys NetScreen).

There is also a precedent within the industry for this type of deal. Back in 2003, software specialist Check Point Software Technologies Ltd. (Nasdaq: CHKP) coughed up $205 million for Sygate’s competitor Zone Labs Inc. (see Check Point Buys Zone Labs).

Cisco itself has already dipped its toe into these waters, by acquiring management appliance vendor Protego Networks last year (see Cisco Picks Up Protego).

However, Jon Brody, Sygate’s vice-president of marketing, refused to be drawn on all the M&A talk when he spoke to NDCF in San Francisco. “I don’t have any interest in speculating on anything other than what the needs of our customers are,” he says.As far as customers are concerned, the company has so far amassed over 300, according to the marketing exec. But in 2005, Sygate will launch a renewed assault on both the American Fortune 1000 and large enterprises in Europe and Asia, he adds.

Sygate will also be adding to its growing list of partners at this week’s RSA conference. Switch vendor Foundry Networks Inc. (Nasdaq: FDRY) will join a list that includes the likes of

Microsoft Corp. (Nasdaq: MSFT), Hewlett-Packard Co. (NYSE: HPQ) and, notably, both Cisco and Juniper.

But, even if Sygate were to get acquired, integration could take a while. Sharon Besser, Check Point’s director of security marketing told NDCF that it took about six months to integrate the Zone Labs product line. But, with this process now complete, the vendor is planning enhancements to its newly-acquired NAC technology.

These include extending the software’s ability to manage a range of security devices and protocols, he says.

A third vendor, Endforce, Inc. is also playing in this space, and will unveil the latest version of its flagship Enterprise software at this week’s RSA show.But, what about Cisco and Juniper? "We're not going to second-guess acquisitions but we recently made an acquisition in this space with Protego and we have been doing a lot of in-house work," says a Cisco spokeswoman.

Juniper declined to provide a comment for this article.

— James Rogers, Site Editor, Next-gen Data Center Forum