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Symantec Buys Into Online E-Mail Archiving

Acquisition of MessageLabs fills a major gap in Symantec's software as a service portfolio, but the software giant also may be aiding a smaller competitor

Today Symantec announced its intention to acquire MessageLabs, which provides SaaS-based e-mail security and message archiving. Symantec will pay approximately $695 million for the U.K.-based company.

Symantec already offers a hosted mail security service, which it launched in 2005. In a letter to customers, the company says it will honor existing contracts, and then migrate customers to the MessageLabs service.

Why is Symantec abandoning its own service offering? My guess is the company wanted MessageLabs in major part for the company's e-mail archiving service. While Symantec's Enterprise Vault dominates the software e-mail archive market, it simply wasn't a player in the online space. Symantec was losing ground to Google and others that have moved more quickly to tap into growing demand.

The fact is, more enterprises are warming to the idea of archiving e-mail in the cloud. In an InformationWeek reader survey on archiving, 39% of respondents evaluating e-mail archiving technology are considering both services and software. An additional 7% are only looking at the service option.

Vendors also are aggressively moving into the space. Dell paid $155 million for MessageOne, which provides e-mail archiving, continuity, and compliance services. Google paid $625 million for Postini in 2007. Other vendors that offer hosted e-mail archiving include Microsoft, IBM, Tangent, Safecore, and Live Office.

Hosted e-mail archiving appeals to enterprises for several reasons. As with other services, SaaS-based archiving is fairly simple to deploy, and requires less capital investment than doing it yourself. Second, as e-discovery pressures mount, more companies are turning to archives to help them properly retain messages and be able to find and produce them in a timely, cost-effective manner.

However, Symantec also is getting into a bit of tangle with this acquisition. MessageLabs doesn't have its own archiving service. Instead, it rebrands an offering from Fortiva -- which was acquired earlier this year by Proofpoint, which competes with Symantec in the messaging security market.

Proofpoint couldn't comment on how its relationship with MessageLabs might change in the coming days and weeks, but of all the companies affected by this acquistion, Proofpoint may be the biggest beneficiary.

If Symantec maintains the OEM relationship, Proofpoint won't really be competing against Symantec in the SaaS archiving space, because any deals that Symantec wins will still funnel revenue to Proofpoint. At the same time, Symantec's marketing muscle and brand recognition counterbalances Google, Proofpoint's other main SaaS competiton.

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