July 2, 2006

EMC has committed about $2.1 billion for the acquisition of security pioneer RSA Security, which posted $310 million in revenue in 2005.

Analyst Graham Titterington of Ovum does not complete see synergy in this deal: "RSA's strengths in identity management and forensics are not directly applicable to storage management or content management (yet alone virtualization), the areas where EMC plays."

The strategic imperative, he adds, is for EMC to pursue "further security acquisitions to rescue RSA from being the island that it appears to be today."

That said, RSA, which will be EMC's Information Security Division, has a strong play in SecurID tokens, which can serve as a fine access control layer over the data stored in EMC products.

The question then becomes why EMC would pay so much for a company from which it will basically pluck a single access control asset.

Financial analyst Richard Stice of Standard & Poor's Equity Research was one of the onlookers surprised by the scale of the deal, noting that, "We have expected [EMC] to target smaller candidates."

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