With Purchase of SonicWall, Dell Bolsters Its IT Security Cache

by Cynthia Wilson | March 14, 2012 6:15 am

Dell’s (NASDAQ:DELL[1]) push to reinvent itself continues with its planned purchase of IT security firm SonicWall. Financial terms of the deal were not disclosed, but Dell said it expects to complete the acquisition by the end of the second quarter.

SonicWall, based in San Jose, Calif., specializes in firewalls, secure remote access, email security, and data backup and recovery. The company was publicly traded before private equity firm Thoma Bravo bought it in 2010 for $717 million. Before that, notes Brian Marshall, a technology analyst for New York-based ISI Group, SonicWall reported annual revenue of $220 million.

With PCs losing market share to computer tablets such as Apple’s (NASDAQ:AAPL[2]) iPad — whose sales, combined with those of Macs, made Apple the world’s top seller of client PCs, ahead of Hewlett-Packard (NYSE:HPQ[3]) and Lenovo (PINK:LNVGY[4]) — Dell is looking for higher-margin business opportunities.

Last month Dell officially announced the formation of a software group within the company and the acquisition of Virginia-based AppAssure Software, which develops backup software for virtual, physical, and cloud storage. Dell’s software assets already included SecureWorks security services, data encryption, and Dell KACE vulnerability and patch management. By bringing SonicWall firewall and remote access services into the fold, Dell will be able to offer customers a broader range of security services.

“Our customers see security as a key IT concern for the foreseeable future. SonicWall gives Dell access to unique intellectual property resources and technology that position us well in fast-growing parts of the software security business,” the group’s president, John Swainson, said in a statement posted on Dell’s website.

Familiar faces in IT security

Dell’s earnings dropped 18% during its most recent fiscal fourth quarter and the company expects revenue for the quarter ending April 1 to fall 7% quarter to quarter. So investors may welcome the news that the company, based in Round Rock, Texas, is expanding its cybersecurity offerings even though the field is quickly becoming crowded with competitors, including other PC makers.

Hewlett-Packard recently announced plans to offer a cloud computing service similar to Amazon (NASDAQ:AMZN[5]) Web Services. HP also plans to offer tools for developers to use popular online software languages, like Ruby, Java, and PHP, and to offer customers ways to manage their workloads remotely.

Lenovo, meanwhile, announced that it has teamed with SugarSync to offer Lenovo Cloud Storage, an open cloud service for consumers worldwide to sync and back up their files, photos, music, and movies. In addition to Lenovo devices, the service, which launched March 13, will work on a broad range of Internet-able laptops, smartphones, and tablets from other manufacturers.

Dell hasn’t given up on the PC market. The company said it wants to make a tablet that operates on Microsoft’s (NASDAQ:MSFT[6]) Windows 8 software. But with network hackers upping their game, there’s room for Dell to begin making a bigger name for itself in IT security.

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