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VeriSign Snaps Up iDefense

VeriSign Inc. (Nasdaq: VRSN) has stumped up $40 million for privately held security intelligence outfit iDefense Inc. in a bid to strengthen the government appeal of its managed services (see VeriSign Acquires iDefense).

iDefense offers in-depth, round-the-clock subscription services that track IT vulnerabilities for worldwide, multilingual clients. For example, the Reston, Va.-based startup says its customers were already hip to the SoBig.F and Blaster malicious code before it invaded many data centers.

The deal is VeriSign’s latest attempt to jostle managed services rivals Symantec Corp. (Nasdaq: SYMC) and Internet Security Systems Inc. (Nasdaq: ISSX). (See Symantec Integrates Vulnerability Data, Symantec Managed Services Offers IPS, and Subs, Services Support ISS .)

VeriSign's been working hard to get ahead. Last year, the company spent $135 million to acquire managed security service provider Guardent, an established player in the financial services sector (see Verisign Acquires Guardent).

Last month, VeriSign entered into a partnership with Global Crossing Ltd. (Nasdaq: GLBC) to deliver managed security services to telecom customers. The vendor has also joined forces with the likes of Secure Computing Corp. (Nasdaq: SCUR), WilTel Communications Group Inc. (Nasdaq: WTEL), and Sun Microsystems Inc. (Nasdaq: SUNW) over the last 18 months to piggyback security services onto their offerings.

VeriSign's partnership strategy is well chosen. Light Reading Insider reported last year that service providers, as the managers of global networks, are well positioned to have the widest understanding of global networking security threats (see Managed Security Services Pipe Up).

With the iDefense acquisition, VeriSign is hoping to expand its horizons into yet another lucrative market -- government. Federal spending on security is expected to reach $7 billion by 2010 (see Input: Fed Spending to Hit $7B and Homeland Security Spending Spree). Customers like the Department of Homeland Security and the Department of Defense are key to getting a piece of the action.

Because iDefense owns a sizeable portion of the government security information sector, the acquisition is a significant "stepping stone," according to Counse Broders, principal analyst for Internet managed services at Current Analysis.

The purchase of iDefense is also a move toward getting some specialized expertise in house. Broders warns that VeriSign should not become over-reliant on its industry partners to deliver managed security services. “They need to ensure that their own sales organization can grow their company organically,” he says. “They need to continue doing this.”

iDefense will take on the VeriSign name, and VeriSign plans to roll iDefense's research into its own managed services. VeriSign will also retain iDefense's 45 employees. However, a spokesman says iDefense reports and alerts will still be available as standalone services, separate from VeriSign's products.

In trading today, shares of VeriSign fell $0.36 (1.2%) to $29.60.

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

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