Post-acquisition, MessageLabs harmonizes with Symantec

Symantec is tapping MessageLabs' expertise in software as a service to develop more hosted products

Symantec has taken a relatively hands-off approach with its integration of hosted messaging provider MessageLabs since its acquisition of the company in November 2008, according to MessageLabs' former CEO.

Many of the same managers have stayed on since Symantec announced in October 2008 that it would pay US$695 million for MessageLabs, said Adrian Chamberlain, who is now a senior vice president in Symantec's Software-as-a-Service group.

Still, "you'd expect there'd be some bumps," Chamberlain said. Symantec hasn't always had the best luck when acquiring companies.

In early 2007, then-CEO John Thompson called the acquisition of storage vendor Veritas Software one of his biggest challenges in his nearly four decades in the industry.

MessageLabs is best known for its hosted e-mail service that scrubs clients' e-mail of spam and malicious software. Customers pay a monthly subscription for the service.

The filtering is done in MessageLab's data centers, and the clean e-mail is delivered through messaging platforms such as Microsoft Exchange and Lotus Domino, among others.

MessageLabs has also branched off into other services, such as scanning instant messages for security threats and filtering Web traffic.

MessageLabs has been instrumental in turning more enterprise customers onto SaaS (software as a service), a concept where applications reside in remote data centers that perform the computing with the results delivered to customers over the Internet.

SaaS has grown in popularity as companies have shown growing confidence in companies such as to hold their data and also provide a reliable service.

In part due to MessageLabs, which was founded in the U.K., up to 35 percent of U.K. businesses use a SaaS product for their messaging security, said James Palmer, also a vice president in Symantec's SaaS group.

SaaS products for e-mail also have strong traction in Australia, the U.S., Japan and Germany, he said, citing industry figures.

But selling SaaS wasn't easy at first. Part of the reason Symantec has left much of MessageLabs' team intact "rather than carve the whole thing up" was because of its expertise in selling SaaS to clients, Chamberlain said.

As a result, "we've been able to keep -- especially in a downturn -- a lot of momentum going," Chamberlain said.

But it's not all good. Companies are laying off workers. MessageLabs' subscription rate is charged per user, so as those employees stop working, those companies also stop paying the monthly fee for departed workers, Chamberlain said.

Still, that flexibility is appealing for companies, which are not locked into a set number of licenses for desktop-based software, he said.

MessageLabs has been able to keep up its average revenue per user by upselling new services around customers' renewal times, such as its Web and instant-messenger filtering.

About 42 percent of its 20,000 or so customers are using four or more services, Chamberlain said.

MessageLabs and Symantec are now working on hosted versions of some of Symantec's products, such as the Brightmail antispam software and appliance, and a hosted version of Symantec's endpoint protection software, Chamberlain said.

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