NetScreen plans to acquire OneSecure and its intrusion detection technology. What's it mean for the industry?

August 22, 2002

3 Min Read
NetScreen Acquires OneSecure

NetScreen Technologies Inc. (Nasdaq: NSCN), a maker of carrier-class firewalls, has signed a definitive agreement to acquire intrusion prevention and detection company OneSecure Inc. (see NetScreen to Acquire OneSecure).

The deal calls for $40.3 million in NetScreen stock, with the option to use cash for some of the stock. NetScreen also will assume OneSecure’s approximately $3 million in outstanding options, according to Chris Roeckl, NetScreen’s director of corporate marketing.

The acquisition, which is NetScreen’s first, is a significant step for the company and for the network security sector, observers say. It indicates that the market is moving towards combining firewalls with advanced intrusion detection and prevention technology.

Intrusion detection systems (IDSs) have been around for awhile and represent a growing market. In today's release, NetScreen refers to a recent report from IDC that puts the IDS market at nearly $1 billion by 2005.

Until recently though, it's proved difficult to produce IDS devices accurate enough to also perform intrusion prevention. That's because in contrast with firewalls, which passively control access into and out of an enterprise network based on predefined policies, IDSs actively scan the network looking for anomalies. This can quickly lead to data overload, as IDSs sift thousands of requests for network entry. Most vendors have focused on making IDSs more selective, instead of adding prevention, or the ability to shut down unauthorized access attempts.

"IDSs generate so much false-positive information that if they could shut down the network every time they thought there was an intrusion, they'd shut it down all the time," says Infonetics Research Inc. analyst Jeff Wilson.

Now, it looks as though the industry is getting ready to take the crucial step toward putting together firewalls, IDSs, and prevention technology. And Wilson says that has the potential to change the security landscape. A working intrusion prevention device would basically function as an active firewall, he says. "That could jeopardize the future of the standalone firewall market."

Consolidation is key to this trend. “The walls between firewalls and [intrusion detection] are coming down,” Wilson says. “Obviously the IDS market is hopping right now. We’re going to see [acquisitions].... People are realizing that intrusion detection is ready to grow substantially."

Wilson says he expects several of NetScreen’s competitors to start moving in the same direction, buying up companies in order to combine firewall and IDS. The field includes firms such as SonicWall Inc. (Nasdaq: SNWL) and WatchGuard Technologies Inc. (Nasdaq: WGRD). One competitor, IntruVert Networks Inc., an IDS vendor, may be among the first to seek a firewall partner, Wilson thinks.

Meantime, NetScreen has its work cut out. OneSecure claims that it already has a working appliance and that it has about 20 customers to prove it. The company says it started shipping its Intrusion Detection and Prevention system (IDP) in December last year. When the acquisition closes, which is expected to happen within 30 days, this product will be available to NetScreen customers too.

But as with any acquisition, product integration remains a challenge. In the first quarter of 2003, NetScreen intends to integrate OneSecure’s technology into its hardware, and after the second half of 2003, NetScreen intends to launch a new line of purpose-built integrated security gateways, combining firewall, VPN (virtual private network), and IDS technology, according to Roeckl.

There's also the matter of combining personnel. NetScreen looked at more than a dozen players before deciding that OneSecure was the best buy, according to Roeckl. He says OneSecure seemed the natural choice, since the two companies have a relationship that goes back to early 2001 and they are practically next-door neighbors in Sunnyvale, Calif.

The proximity could ease integration problems. "It will be very easy to integrate the workforces,” Roeckl says. “Our plan is to keep the vast majority of the OneSecure staff... People are what make the product.”

OneSecure has between 60 and 70 employees.

— Eugénie Larson, Reporter, Light Reading

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