Will customers benefit from SafeNet’s merger with Rainbow?

SafeNet’s merger with Rainbow Technologies will give it expertise in Secure Sockets Layer, something that SafeNet may need to stay a player in remote access.

SafeNet has made a good business out of writing IPSec VPN clients that other companies then customize and sell under their own names to give their customers the software they need to connect to VPN gateways. Cisco and Microsoft have been SafeNet customers.

Then along comes SSL remote access, providing what in many cases substitutes for remote access IPSec VPNs. SSL remote access in most of its incarnations requires no permanent remote client. If SSL cuts into the IPSec remote access market as it seems to be doing now and as market analysts suggest it will do in the long-term, then SafeNet’s VPN client may be doomed in the long run.

So from a business point of view, SafeNet’s merger with Rainbow makes sense for SafeNet.

Customers of the new company will be able to buy the full array of both companies’ products, which go well beyond remote access. Rainbow, for instance, sells widely regarded authentication tokens as well as SSL acceleration gear and security software that is used by the federal government. SafeNet sells a variety of encryption tools that has been built to top-secret government specifications. So clearly the merged company will do well selling to the security conscious federal government.

As for the more mundane business user, the companies’ products will continue to offer the value they always have, but there doesn’t seem to be a clear path here to revolutionary new products.