Network Associates ramps up after buying spree
- By Colleen O'Hara, Heather Harreld
- Oct 18, 1998
Network Associates Inc., the world's largest independent information security company, has seen its federal government business grow faster than the company as a whole, with the company's chief executive officer setting an even loftier goal for future growth in the federal arena.
Fueled by a recent acquisition spree, the company overall has experienced revenue growth at a blistering pace— from $90 million in 1995 when it was a desktop utility company to an estimated $965 million this year as an enterprise security and management vendor.
Of that, 10 percent of the concern's domestic revenue comes from federal government sales, and Network Associates chairman and CEO William Larson has set a target for federal government business to total 20 percent of the company's domestic sales.
It was only one year ago this month that Network Associates came into existence, formed by the merger of McAfee Associates Inc. and Network General. Since then, a series of acquisitions— including Pretty Good Privacy Inc. (PGP), Helix Software Co. Inc., Trusted Information Systems Inc. (TIS), Secure Networks Inc., Magic Solutions Inc. and CyberMedia Inc.— has helped the company mold itself into a massive security company.
Now the firm is ready to make a name for itself among users who are probably more familiar with the vendors it has acquired.
McAfee was one of two anti-virus concerns tapped last year by the Defense Department to provide anti-virus software for more than 2.1 million workstations. The Department of Veterans Affairs has standardized on McAfee anti-virus products. The Gauntlet firewall from TIS has a strong presence in the Navy, and Network Associates just delivered PGP software to 1,800 users on Capitol Hill.
"We will slow down our acquisitions for a while," said Harvey Weiss, vice president of Network Associates Federal Business Group, which officially open-ed in April. "It's time to take a breather and focus on our goal to have an integrated product solution. There is a rhyme and reason to the acquisitions: They will make Network Associates the leading network management and network security vendor in the market." The company's products are optimized for Microsoft Corp.'s Windows NT.
Network Associates' strategy is to combine products into suites and sell users a license for the whole suite offering, similar to what Microsoft offers with Microsoft Office. "We offer one license for the suite. We add value to the suite by adding products to it," said Marvin Dickerson, senior product manager at Network Associates. "It's important for government users that have [strict] budgets to adhere to."
For example, Larson likes to point to one of the company's newest product suites, Net Tools, which is made up of Net Tools Secure and Net Tools Manager. The Secure product includes encryption, risk assessment, intrusion detection, firewall, virtual private networking and security management capabilities. The Manager product provides help-desk and service-desk capabilities.
While other security vendors may be selling "point products," which may only offer one aspect of security, such as intrusion detection, Network Associates has integrated a complete solution with added amenities such as centralized management and help-desk services, Larson said.
"It's kind of like giving you the tools, and the tool belt is free," Larson said. "There's three key reasons why the suite [concept] wins: better price, better service and support, and faster deployment. You don't have to sacrifice best of breed to get integration."
Joshua Reynolds, associate analyst with Dataquest, said Network Associates already has done a good job integrating pieces of technology purchased from each company into its overall product line.
"The government tends to be really picky about the quality of its security; it wants best-of-breed solutions," Reynolds said. "[Network Associates] bought some great names. They can make a good argument that they've integrated them well."
As part of its strategy for boosting sales in the federal market, Network Associates plans to sell its products through prime contractors such as Lockheed Martin Corp., Computer Sciences Corp. and Litton/PRC Inc., instead of the direct sales approach taken by many of its acquisitions.
It also will continue to sell products off governmentwide contracts, including NASA's Scientific and Engineering Workstation Procurement II and the National Institutes of Health's Electronic Computer Store II. The company is pursuing the Outsourcing Desktop Initiative for NASA and the General Services Administration's Seat Management contracts.
While each acquired company did well on its own in government, "now we have a more focused sales force [along] with very strong technical support for agencies," Weiss said. No sales or technical people were laid off during the course of the acquisitions; instead, they were brought together under one roof, he added.