Novell Adds Security Prong

Novell today announced the acquisition of network security solutions
provider e-Security for $72 million in cash.

Novell Chairman and CEO Jack Messman said that the deal would bump his company’s annual revenues by $20 million. But more importantly, he said during a noon conference
call, the deal closes an important gap in Novell’s overall security

“This demonstrates our commitment to being a strong player in the security
market,” he said.

Messman also said the acquisition reflects the company’s strong vision.

“We have an aggressive plan to integrate and deliver new products,” he said.

Messman was asked whether this acquisition was a distraction from its
primary focus; the company has said that Linux would be the centerpiece of
its strategic direction.

However, Messman disputed that proposition.

“We’ve always said we had a three-pronged strategy,” he told

“We have not diminished our focus on Linux. We are focusing primarily on
Linux but also identity and our workgroup products [i.e. Novell’s Netware
and open enterprise server products]. We are focused on all three of those.”

Messman said that Novell’s identity security products have grown by between
12 percent and 14 percent over the past year.

Novell currently offers security solutions focused on identity and systems
management, such as SecureLogin, Storage Manager and Identity Manager.

But its platform does not currently allow for any kind of real-time alerts
or event management.

The solution provided by the addition of e-Security’s flagship product,
Sentinel 5, would allow network administrators to view all events on the
network, be they attempted intrusions by hackers or attempts by unauthorized
employees to gain access to privileged information.

It also records those
activities for compliance purposes.

“The need to provide comprehensive solutions is very pervasive,” said

The key component of this acquisition, said John Dragoon, Novell’s chief
marketing officer, is that it gives network administrators the ability to
take immediate action on security and compliance breaches.

“What’s new today is that last mile,” he said. “Administrators will be able to take action based on roles and policies.”

Sentinel 5 also provides security information and compliance management, but
Dragoon noted that this component duplicates the functionalities of Novell Audit.

The addition of Sentinel 5 “gives us a view of all user, network and
appliance events,” said Messman. “It can streamline monitoring and help our customers build
a more rigorous compliance program.”

“We’re connecting identity management with security through event
monitoring,” he added.

Both Dragoon and Reed Harrison, founder and CTO of
e-Security, emphasized that customers and partners of both
companies would share in the synergies that they expect the acquisition to

Existing Sentinel 5 users will be offered price breaks if they add Novell’s
Identity Manager. The same will be true of Novell customers where
Sentinel 5 is concerned, Dragoon said.

But special deals will not be offered
beyond July 31.

Harrison was eager to reassure his partner community. North American sales
of e-Security have been driven by consolidators, such as Lucent, Sun,
PricewaterhouseCoopers and HP, he said.

“One of the key drivers of this acquisition was to keep business as usual,” Harrison added. “All of those [relationships] are going to be preserved to the best of our ability.”

Messman would not disclose revenues or growth at privately held e-Security,
and noted that the estimated additional $20 million in incremental revenues
assumed revenue synergies between the companies and were not generated
purely by e-Security.

Nevertheless, Messman re-emphasized the market opportunity that he believes
this represents for Novell.

“Identity and access management grew by 43 percent” in the first quarter of this
year compared to the first quarter of 2005, he said.

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