IBM's $1.3 billion deal last week to acquire Internet Security Systems is fraught with pitfalls and possibilities: It gives Big Blue a major stake in the security game, but some wonder whether the company will know what to do with it.

In acquiring ISS - which makes Proventia intrusion-detection and -prevention appliances and offers managed security services - IBM says it wants to boost its bottom line and its security profile. The acquisition comes less than two weeks after IBM unveiled a $1.6 billion, high-profile bid to acquire FileNet's enterprise content-management software.

Lloyd Hession, CSO at BT Radianz, says developing security products requires the ability to make significant investments to keep up with the latest threats and the fast pace of change. IBM has the kind of deep pockets that could greatly aid ISS in continuing to invest in R&D as it must do.

"For ISS, it's getting funding from IBM to keep these products viable," Hession says. And by becoming part of IBM, ISS gains a lot of ground it doesn't have now. "ISS will have a whole new sales channel," he says. "They have faced an uphill battle, not being part of an enterprise vendor. Security solutions are moving away from being line-item initiatives in e-commerce buys. These are relationship buys; it has moved into the executive suite," he says.

The trend to integrated packages such as Tivoli brings value when security products work within management suites, Hession notes. The potential drawback for ISS is it becomes "part of a large organization, a small component in a huge IBM machine," he says, adding, "the established power base at Tivoli may be somewhat resistant to ISS as the new kid on the block." The challenge for IBM and ISS is to make sure ISS "doesn't get buried."

Analysts, however, question how easily and quickly IBM will be able to compete in the network-security arena, particularly against a key rival, Cisco.

"IBM is looking to increase revenue, but we just don't think it makes sense for IBM to own network-security products," says John Pescatore, security analyst at Gartner. "IBM has been successful in identity- and access-management software. But the name IBM doesn't ring a bell to any network-security person. It's not a brand to compete against Cisco in selling network-security products."