Anti-spam industry consolidating
By Jon Swartz
USA Today
Spam might be big business for junk e-mailers and spam-fighting companies, but something is shrinking: the number of anti-spam vendors.
Today, 100 to 150 companies worldwide offer anti-spam products and services. By 2005's end, there could be about a dozen as consolidation sweeps a maturing industry and larger companies scramble for a piece of a billion-dollar market.
"There are simply too many vendors, and many of them will either be acquired or go out of business," says independent analyst Michael Osterman.
When the dust settles, consumers and corporate customers will be left with fewer companies with more comprehensive anti-spam solutions, experts say. Pricing for products isn't expected to change much because competition will remain fierce.
What's behind the shakeout:
Acquisitions. Large computer-security companies are snapping up promising smaller rivals to round out their product lines.
Symantec, a leader in anti-virus software but lacking in anti-spam products, bought TurnTide this month for $28 million. In June, Symantec acquired Brightmail, the leading anti-spam vendor, for $370 million. Tumbleweed Communications in March acquired Corvigo.
Partnerships. Tech's biggest players are striking up deals with spam-fighting companies that could lead to buyouts.
IBM announced it is partnering with MessageLabs to get into the e-mail-filtering business. Trend Micro has a deal with Postini and is authoring its own spam-blocking tools.
Dropouts. The trough for venture financing of anti-spam companies is thinning, which could lead to liquidation and forced mergers for those low on cash. Venture capitalists poured $81 million into e-mail-management software, including anti-spam software, last year. That was up 47 percent from 2002, says the MoneyTree Survey.
But in 2004's first quarter — with the exception of CipherTrust, which received $42 million — investments were less than $10 million.
Anti-spam sales have surged as companies buy software and hardware to combat junk e-mail, which accounts for up to 60 percent of e-mail traffic and costs companies an estimated $10 billion annually.
Spending on anti-spam products and services will swell to almost $1 billion this year, up 50 percent from 2003, says market researcher The Radicati Group.
"Consolidation is happening, but that doesn't mean market (revenue) isn't growing," Cloudmark CEO Karl Jacob says.
