Today, Avast announced that it had completed the acquisition process of former arch-rival, AVG. The deal cost the former a hefty $1.4 Billion, however, it has also gained it almost 170 million new users.
The deal was actually announced way back in July. However, considering the size of both the parties involved in the acquisition, it took a couple of months to get all the finer points straightened out. The reasons behind this acquisition are quite obvious. Together, Avast and AVG will be able to reach one-third of the world’s PC users outside of China and will be able to offer brand new, innovative product by combining their technologies.
The companies are also planning to seriously enter the Internet of things niche — a sector that sorely needs some security. While iOT is pretty awesome, it is also very vulnerable — i mean you cant install an antivirus on a toaster or a camera right? — and we have recently seen how connected application can be deployed by hackers for their own ends — such as the 1 TBPS DDoS attack that occurred recently.
Together, the companies will be working to fix issues of the sort along with continuing to operate in their respective markets. The deal has cost Avast $1.4 Billion — $1.3 Billion for AVG at a price of $25 per share and 100 million for clearing a previous debt that AVG has been lugging around.
Speaking on the topic to TechCrunch, Avast CEO Vince Steckler said,
This was, I think, the fourth attempt we have made in the last two or two and a half years to buy AVG. We approached them, we got kind of tired of being constantly turned down — so we approached them kind of one last time and told them hey we’ll pay this amount, no higher, no negotiations, tell us yes or no. And they said yes.
Along with taking the total number of customers up to 400 million — of which almost 240 million are Avast’s — the deal will also provide the entity with huge pools of data that can be used to improve their security systems — by using a combination of data analysis and machine learning. By analyzing the huge data both Avast and AVG have undoubtedly managed to accumulate over the years, the companies will be able to come up ith new, enhanced ways of dealing with threats.
Sure, Anti-virus industry has been hit hard lately by two factors. One, there has been a shift to companies professing to offer free and freemium services and two, the slowdown in the sale of PCs across the world has led to a slowdown in the anti-virus industry as well — after all, the latter is inherently dependent on the former.
By teaming together, AVG and Avast will have access to a much larger market and thus, will be able to absorb the slowdowns in a more efficient way, while also enabling them to make the most of new opportunities.
The fact that we have such a large geographic spread allows us to ride much better through the market ups and downs. For example, the English language markets are hurt a lot more by the slowdown in PC shipments than the non-English markets. But the English markets monetize much better than the non-English markets, so we have kind of complementary strengths and weaknesses.
Speaking about the security of iOT related devices, Steckler said that it wasn’t really as complicated as it seemed. Considering that all these devices access the web through a router, all you needed to do was focus your efforts on the router itself and voilà!
Very few of the [IoT] things actually directly connect to the Internet. Most everything connects to the router, which connects to the Internet. So… you don’t need to necessarily protect each device because most of the devices are fairly simplistic. What you need to do is protect the devices from being broken into and the easiest point of doing that is at the network or gateway level. Which is where we do it.
While Avast is going ahead with this, protection through Router strategy, AVG is apparently trying a different approach. However, Steckler didn’t offer any details about what the supposedly different strategy actually was.
Meanwhile, one thing is certain, with AVG and Avast on the same team, the antivirus market has just seen one of its most significant consolidations in recent years, perhaps ever. There may be several downsides to this partnership as well, such as global layoffs to eliminate duplicate roles, however, the companies have not mentioned anything on that point at the moment.