Opportunities for cyber security business in commercial markets will outpace opportunities in government markets now and in the coming years, although both will continue to grow rapidly, an executive with Raytheon’s [RTN] newly renamed Forcepoint joint venture said on Friday.
“The need for cyber defense is becoming more aboard to [corporate] boards across the world,” Ed Hammersla, chief strategy officer and president of the Federal Division of Forcepoint, told Defense Daily in a telephone interview. “Four years ago cyber security was not a board-level issue. Now there’s not a board of directors out there that isn’t worried about the challenge, the liability, and other risks associated with cyber.”
Still, Hammersla said, both the government and commercial markets for cyber security solutions are “growing quite rapidly.”
Forcepoint was created through the $1.9 billion acquisition by Raytheon last year of Websense, which is focused on providing information security solutions to mid-tier commercial companies. Raytheon acquired 80 percent of Websense from the private equity firm Vista Equity Partners, which holds the remaining stake in the joint venture.
For about six months the joint venture was called Raytheon/Websense, consisting of Raytheon’s Cyber Products business and Websense, but in November it announced a plan to rebrand and rename itself in line with the integration of the two businesses. On Thursday the joint venture announced the Forcepoint name, which also includes two acquisitions this month of business lines from Intel [INTC] involved in creating firewall solutions (Defense Daily, Jan. 15).
About two-thirds of Forcepoint’s sales are with commercial customers and the remainder with federal and other government customers, Hammersla said. With growth opportunities in the commercial space running ahead of those with the government, he predicts that Forcepoint’s revenue in the next few years will likely consist of about 75 percent commercial and the rest from government customers.
Forcepoint will still “probably have a stronger presence in the federal market and the government markets than most of our competitors will because we’re constantly innovating and we’re constantly coming up with new technologies,” Hammersla said.
Despite Raytheon’s heritage defense and federal business, Raytheon Cyber Products brought with it some commercial customers, which mainly are large companies of the Fortune 100 variety, Hammersla said. Websense, on the other hand, has thousands of customers mainly in the range of 1,000 to 1,500 employees, he said.
One of the focus points for Forcepoint with the integration of Raytheon’s and Websense’s commercial technologies is to bring the combined offerings to that “Fortune 500, Fortune 1000 customer set,” Hammersla said. The company also plans to expand its federal business beyond the traditional Defense Department and intelligence community customers into the broader federal civilian market and more unclassified customers within DoD, he said.
Hammersla said the acquisition this month from Intel of Sidewinder, which is a legacy criteria evaluated firewall solution, brings more intelligence and Navy customers. He also said that Sidewinder provides an opportunity to bring these customers new hardware and other capabilities and gives Forcepoint new technology that can be further developed to allow the separation of classified networks.
Stonesoft, which was also acquired from Intel this month, is a next generation firewall that Hammersla said has “superior capabilities” compared to competitors for cloud and remote administration for large companies.
Terms of the Sidewinder and Stonesoft deals were not disclosed.
Hammersla said that acquisitions will be part of Forcepoint’s growth strategy. The company has its own mergers and acquisitions group, partners with Raytheon’s corporate development group, and can draw on the expertise at Vista Equity Partners, he said.
Deals the sizes of Websense are less likely but Hammersla said they can’t be ruled out. “We’re looking for the technology snap-in acquisition,” he said. “We think we have the fundamental elements we needed in the initial joint venture…so we’ve got the international and domestic market presence and channel structure that we we’re hoping to get with Websense.”
Organic growth is also very important, Hammersla said. Forcepoint has access to innovative cyber work within Raytheon and has an active technology transfer process from within the company and government labs, he said. The company is currently evaluating about a dozen technologies that could potentially be added to its portfolio, he said.
At the time Raytheon announced the acquisition of Websense last April, it expected the joint venture to have about $500 million in sales in 2015.