Iomega, whose inexpensive external Zip and Jazz storage disk drives peppered the SMB landscape in the early part of the decade, announced July 11 that it has acquired CSCI, a privately held managed services and IT outsourcing company.
Iomega CEO Jonathan Huberman, who joined the San Diego-based company in February, told eWEEK that the transaction totaled $11.5 million and consisted of $7 million in stock and $4.5 million in cash. The deal is expected to close within 60 days.
CSCIs main product is OfficeScreen services, a suite of managed VPNs that provide SMBs (small and midsize businesses) with secure WANs that link offices and remote workers.
Iomegas bread-and-butter products now are its REV 35GB drives, the rack-mount REV 1000 Autoloader and the desktop REV Loader 280. Iomega still sells and services 100MB, 250MB and 750MB Zip drives.
With the addition of OfficeScreen, Iomega—known in the past only for its storage hardware—is taking the first step toward becoming a managed services company, Huberman said.
“Small businesses need simple, secure, easy-to-use networks from a company they trust,” Huberman said. “The debut of Iomega OfficeScreen services will expand on our 25-year history of dependable data security products for SMBs and position the company to capitalize on the growing managed services market.”
Currently hundreds of SMBs in the United States utilize OfficeScreen as a secure, outsourced network security and VPN service that does not require upfront hardware expenses or setup costs, Huberman said.
“This is a good combination for small businesses that dont have dedicated IT resources or large IT budgets,” Huberman said.
OfficeScreen consists of a firewall/VPN, SSL (Secure Sockets Layer) and IP security bundles to create WANs that connect remote offices and workers to applications and data at a companys headquarters. The VPN also aims to counter security threats from hackers, worms and viruses across a companys entire network.
“SMBs face many of the same risks and regulatory requirements as Fortune 100 corporations,” Huberman said, “whether its HIPAA [Health Insurance Portability and Accountability Act] compliance, SEC regulations, Sarbanes-Oxley requirements or protection from malicious intrusions.”
OfficeScreen incorporates multifunction remote access hardware packages and security products from Iomegas longtime partner, Juniper Networks.
Iomega said it expects to grow the existing OfficeScreen business in the United States by selling its branded managed services through several different channels, including telecommunications providers, hosting companies, VARs and systems integrators, direct and indirect sales organizations, and retail operations.
By utilizing its European sales infrastructure, Iomega plans to launch its new managed services in international markets before the end of 2006.
“OfficeScreen will provide the basis of a new growth platform and transformation engine for Iomega,” Huberman said. “To make that happen, we will leverage the equity of the Iomega brand, and our worldwide sales, marketing and operations infrastructure.”
Iomegas purchase of CSCI makes it possible to accelerate the growth of OfficeScreen by multiples that the company could not have accomplished on its own, said Rich Tear, CEO of CSCI, also based in San Diego.
According to independent market analysis, the global market for managed security services is expected to be $2.9 billion in 2006, growing to $3.7 billion in 2008.