California – Microsoft Corporation (NASDAQ: MSFT) announced on Tuesday its recent acquisition of Adallom, a cloud security company, for $250 million. However, the value didn’t reach the high expectations for a $300 million deal. The service offered by Adallom slightly varies from the one provided by the fellow Israeli firm Aorato, which Microsoft bought last year.

Adallom is an Israeli startup that have managed to raise over $49 million from investors over its time as a private firm. The company specializes in securing data on the cloud. The new acquisition is a smart move from the tech giant as Microsoft is following the trend of cloud-based computing, in which any data or software could be accessed over the Internet.

Takeshi Numoto Microsoft Coporate Vice President, shares news on Office Web applications for Microsoft Office. Credit: D.Begley / Flickr
Takeshi Numoto Microsoft Coporate Vice President, shares news on Office Web applications for Microsoft Office. Credit: D.Begley / Flickr

Adallom has worked with cloud-based applications such as Salesforce, Dropbox and Microsoft’s Office 365. The three-year-old startup’s technology is expected to be used in several Microsoft product as well, such as the Enterprise Mobility Suite and Advanced Threat Analytics.

The deal between Microsoft and Adallom was first mentioned in July this year, and was initially expected to close at a $300 million agreement. With the incorporation of the Israeli firm Microsoft will be able to provide cyber security packages to enterprises in particular. Microsoft has built its revenue selling packaged programs, such as Office, for business or home computers, but the tech giant is shifting to offering that software through cloud-based subscriptions.

“With more frequent and advanced cyber security attacks continuing to make headlines, customer concerns around security remain top of mind. These concerns pose real challenges for IT, who are charged with protecting company data in this rapidly evolving mobile-first, cloud-first world,” said Microsoft Corporate Vice President, Cloud and Enterprise Marketing, Takeshi Numoto, in a blogpost from the company.

Moreover, the news were delivered the same day Microsoft announced it is also expanding its partnership with Dell to increase the number of Windows 10-powered devices and services for businesses. Strategically, Microsoft’s announcements were revealed a day before a major Apple event is expected to take place. Some predict that Apple is going to present its new tablet aimed for business.

Competition over the Cloud Security Market

The recent $250 million acquisition from Microsoft has highlighted the importance that cloud companies place on security. Many companies, enterprises, businesses and more, don’t take the final decision to adopt this type of storage services because of security concerns. For this, cloud security companies have been working over the years to gain consumers’ trust.

As for now, besides Adallom, there are other five security companies who are aiming high in the cloud market. First on the list is Okta. The company is focused specifically on identity management. Basically, if anyone is inside the a private network, it wants to know about it and why. It is also designed to help users manage all their logins across applications from any device, including Salesforce, Workday, Box, Oracle, Google Apps and Office 365. Okta’s total capital currently $230 million.

Next is Zscaler, which is a cloud data security company that offers a product called “Direct to Cloud Network” designed to protect data from advanced persistent threats by monitoring all traffic in and out of the network. Its total raised is $138 million.

Moreover, among the competition there’s Centrify, which is similar to Okta as it aims for identity management across devices and applications. It works by putting all users into a central database that is monitored and controlled through company policies. Until now, the company has raised through fundraisers about $94 million.

Qualys, is also a cloud security provider. The company works by analyzing threat information to make sure that nothing gets into the user’s system. If some malware is detected, it will show the steps to fix it and then verify when it has been fixed. By scanning all web apps for vulnerabilities it can aid to keep data safe. It is also planning to build a cloud-only firewall. The company has raised $91 million as for now.

Finally, CipherCloud not only works on protecting data, but also communications. The company uses encryption with traffic monitoring, anti-virus scans and other methods to help keep your business safe. Until now, the company has raised $80 million in funding.

Source: Adallom