From: richardred	9/14/2010 12:22:14 AM
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Security Software Grows Increasingly Popular As M&A Target By Jeanette Borzo Of DOW JONES NEWSWIRES SAN FRANCISCO (Dow Jones)--Technology companies are increasingly looking at security-software companies as acquisition targets, hoping they can integrate safety features they buy into their own products. On Monday, Hewlett-Packard Co. (HPQ) was the latest tech giant to strike a deal for a security company, offering roughly $1.5 billion to buy network security company ArcSight Inc. (ARST). The deal follows H-P's earlier acquisition of privately-held Fortify Software Inc. In August, Intel Corp. (INTC) said it would buy security-software vendor McAfee Inc. (MFE) for $7.7 billion. International Business Machines Corp. (IBM) has lately picked up a handful of security companies, including the privately held companies BigFix Inc. and Guardium. The host of deals comes as technology companies seek to address a growing number of threats that are emerging as the way people use computers changes. More and more computing is conducted over cloud-computing networks that let users access remote data. At the same time, more computing is being done from mobile devices, such as smartphones and tablet computers. Prompted by the growing prevalence of viruses, worms and malware, more and more technology companies are trying to build security directly into their products rather than ask users to layer on additional protective software. Some, like IBM, are integrating security features into software applications, such as human resources and accounting programs. "People want more secure products, rather than more security products," said Tom Corn, the chief strategy officer at RSA, the security software division of EMC Corp. (EMC). The desire for security is understandable. In 2008, Symantec Corp. (SYMC) had to create 1.6 million signatures for computer viruses, worms and Trojan horses, Enrique Salem, president and chief executive of Symantec, told Dow Jones in a recent interview. That was more than the previous 17 years combined. Since then, things have only worsened. In 2009, Symantec created nearly double the number of signatures. Cloud computing is also prompting the desire for more built-in security. One of the appeals of cloud computing is it allows applications and data to be stored centrally but accessed remotely. That can often reduce costs for companies employing the strategy. It also can raise the potential harm caused by a security breach because so much data is located in one place. "Cloud computing centralizes sensitive data in a smaller number of locations," said Phil Neray, a data-security vice president at IBM. It just takes one unauthorized entry into a datacenter to unleash extensive damage, he said. At the same time, the rapid rise of smartphones and tablets as alternate computing devices is pushing the appeal of security-software companies. Apple Inc. (AAPL) iPads and Research In Motion Ltd. (RIMM) smartphones are used by consumers and businessmen to connect to the Internet. Point-of-sale machines, ATM's, cars and televisions are also increasingly connected. As those devices connect to others, the potential for them to be hacked rises. "All those computing devices out there are connecting to a network," said Stifel Nicolaus analyst Aaron C. Rakers. "It's another node that needs to be secured." -By Jeanette Borzo, Dow Jones Newswires; 415 765 8230; jeanette.borzo@dowjones.com online.wsj.com