After years of narrow focus on fighting spam, messaging security vendors are branching out in new directions as corporate customers demand more from them than filtering unwanted e-mail. At the same time, this crowded industry is overripe for consolidation, and experts believe only those companies with the technology and deep pockets to satisfy growing customer demands will be left standing.

Also see: Anti-spam offerings grow up

Messaging security vendors face a dilemma; they must stay focused on blocking spam, viruses and other nasty code flooding corporate e-mail streams. But as spam and virus blocking become check-list items instead of purchase drivers, vendors looking to stand out are adding new features ranging from encryption and policy enforcement for outbound messages to new product lines that protect communications other than e-mail, such as instant messaging or Web interactions.

"The days of [vendors that] do strictly content filtering are numbered," says Charles Gautreaux, network administrator with Charlotte Pipe and Foundry Company, a PVC and cast-iron pipe manufacturer in Charlotte, N.C. "All the other features beyond anti-spam and anti-virus are starting to show their value."

The e-mail security market that focuses on protecting customers at the gateway consists of a wide range of vendors. They include appliance makers IronPort, CipherTrust, Mirapoint, Barracuda, Espion and Borderware; hosted service providers Postini and MessageLabs; and companies that sell their products either with integrated hardware or as gateway software, such as Symantec, MailFrontier and Proofpoint. But without clear leaders in the market, this pack of vendors is left chasing after the same set of features like 5-year-olds after a soccer ball. Only those with the R&D, licensing or acquisition budgets to support this expanding market are expected to remain healthy.

"The same customer needs to do all these functions, and would like to have it all integrated, so vendors are clearly being responsive to market requests," says Theresia Gouw Ranzetta, general partner with venture capital firm Accel Partners. "But at some point the vendors' budgets become limited, and they all start fighting it out; we're at the beginning of that."