LogMeIn, which is looking to add more security capabilities to its remote computer access business, is buying password manager LastPass for $110 million in a deal that officials with both companies praised but which raised concerns among some of LastPass' customers.
LogMeIn could pay another $15 million if LastPass hits certain milestones during the two years after the deal closes, which reportedly is expected to occur within the next few weeks. The two companies announced the deal Oct. 9.
It's the latest step by LogMeIn into the identity and access management (IAM) space as the company looks to expand its reach into the Internet of things (IoT), where such technology will be important. LogMeIn last year bought identity management firm Meldium, and at its user conference in Boston earlier this month unveiled an identity manager solution for its Xively IoT platform.
According to company officials, LogMeIn will bring the complementary technologies it already has—including those it gained through its Meldium acquisition—into LastPass. Initially, the company will keep the Meldium and LastPass product lines separate, with the eventually plan being to bring those identity management technologies into a single offering based on the LastPass brand.
"We believe this transaction instantly gives us a market leading position in password management, while also providing a highly favorable foundation for delivering the next generation of identity and access management solutions to individuals, teams and companies," LogMeIn CEO Michael Simon said in a statement.
Identity management will continue to grow in importance as more consumers and workers use cloud, Web and mobile apps, forcing a more decentralized approach to managing identity in the workplace, LogMeIn officials said. The company noted that 70 percent of businesses use employee-introduced applications, and that 80 percent of cloud applications and services contain confidential regulated or company information. In addition, 64 percent of Internet users use the same passwords for more or all Websites they visit.
LastPass—which is incorporated as Marvasol—offers remote access capabilities that enable users to store their encrypted passwords in the cloud. They can then unlock them through a single password through a browser, Web interface or mobile apps available on Google Android and Apple iOS devices. The company offers a free service to consumers and a paid service for enterprises.
LastPass competes with such companies as KeePass, Password Safe, Dashlane and 1Password.
In a post on the company blog, LastPass founder and CEO Joe Siegrist wrote that joining with LogMeIn will give the 7-year-old company access to more resources to grow its offerings.
"We will continue to build and improve LastPass for our free, Premium, and Enterprise customers," Siegrist wrote. "Together with LogMeIn, we'll be able to accomplish more, faster—providing an even better service to millions of people. As we become part of the LogMeIn family over the next several months, we'll be releasing updates to LastPass, introducing new features, and continuing to grow the service as we work to bring LastPass to millions more who struggle with passwords."
However, the deal angered a number of LastPass customers, generating angry posts on Twitter and comments to the announcement on the company's Website.
One commenter to the announcement wrote, "Oh no! This is NOT good news. logmein has a terrible track record with acquisitions. I feel story for the LastPass team, your management has sold you out. Good luck finding new jobs. [Has] anyone got any good recommendations for alternative password managers? Time to jump ship before this ship sinks."
"This is too bad. While LogMeIn has good products, they have a bad reputation for customer service and pricing. I hope they don't ruin what is a good thing with LastPass," another commenter wrote.
Siegrist looked to address the concerns with an addendum to his blog post, saying that "to address the concerns that some in our community have raised, I want to personally assure that this is good news for our users. First of all, we (LogMeIn/LastPass) have no plans to change our existing business model."
In addition, the access LastPass will have to more resources "will enable us to innovate faster, as we continue to strive to deliver an even better product than the one you have come to know and love. It is also important to note that the current LastPass team is staying in place and remains committed to deliver on the promise of privacy, security and convenience that has been our mission since day one."