Email Security Tools: M&A and Market Share
Written by: Myra Snyder, Sr. Mananger, Certifications & Analytics, MSPAlliance
The MSP community has been mulling over ConnectWise’s recent acquisition of Continuum and its meaning for the industry. Many MSPs believe that this acquisition signals a shift toward consolidation for MSP vendors. For the Verified Members, a similar shift may also occur in the email security market.
The graph below shows the usage trends of email security applications for Verified Members since 2016. The most interesting companies in this graph are the 2018 industry leaders: ZixCorp and Barracuda. In 2016, these two applications made up almost 70% of the Verified MSP market. Then, due partially to the growth of the verification program and partly to the introduction of new tools to the market, Barracuda and ZixCorp drop to 40% of the market in 2017. This trend remains about the same in 2018, with Barracuda and Zix collectively gaining back 10% of the market share.
Though the data for 2019 is not final, there are already some exciting trends emerging in this market. Zix has already experienced a 40% growth in Certified Member Usage from 2018 to 2019. However, Zix’s market share could drop from 50% in 2019 as it depends on the usage of other tools, especially Barracuda. Barracuda has also experienced growth in Verified Members usage from 2016 to 2018. Many of the companies that used Barracuda in 2018 have not yet entered the 2019 dataset. Therefore, Barracuda’s market share has room for additional growth.
Email Tool Acquisitions
The majority of the companies in this dataset have been involved in an acquisition within the past two years. Barracuda was acquired by Thoma Bravo and acquired a SaaS provider, PhishLine, in 2018. They also purchased the RMM, Managed Workplace, in 2016. These acquisitions could explain why Barracuda’s market share has remained strong for the past three years. Zix acquired AppRiver in January, which is used by a small percentage of Certified Members. Proofpoint, Sophos, and McAfee also acquired companies this year, Mimecast acquired a company in 2018. Edgewave and TrendMicro were purchased this year, while The Email Laundry was acquired last year. Area 1 is the only company in this dataset that has not yet been involved in any acquisitions.
There is a noticeable correlation between acquisitions and Verified Member usage of email security products. The companies that have acquired other companies are more heavily used on average than the companies that have been acquired themselves. Additionally, the companies that have more recent acquisitions are used more than companies whose purchases are fading into the past.
What do these acquisitions mean for MSPs as a whole? Over time, the email vendors in this that are acquiring other companies are used more frequently by Verified Members. This consolidation is different from the ConnectWise acquisition of Continuum, as the email vendors are acquiring companies from other markets. The email vendors in this data set aren’t owned by the same private equity vendor, reducing the risk that they will consolidate into one conglomerate tool.
Overall, the companies in this data set are acquiring other types of security companies. This indicates that MSPs are demanding higher levels of security from their email security tools. As MSPs are increasingly targeted by cybercriminals it is logical to assume that MSPs are searching for the most secure tools that they can find.
Ultimately, the high level of M&A in this market does not pose a threat to MSPs. Instead, it appears to be a result of their demand, rather than an attempt by these vendors to corner the market. Though the 2019 market seems to be dominated by Zix, this data is subject to change. Overall, the email security market for MSPs is diverse and growing.