Q&A: Microsoft Announces Plans to Acquire FrontBridge Technologies, Inc., a Leading Provider of Secure Managed Messaging Services

REDMOND, Wash., July 20, 2005 – Microsoft today announced its intention to acquire FrontBridge Technologies Inc., a privately held, leading provider of secure managed messaging services based in Los Angeles. FrontBridge advanced e-mail filtering technologies offer spam filtering, virus scanning, disaster recovery, policy enforcement and message-archiving solutions to companies who are looking for a managed e-mail security service. The move allows Microsoft to provide a comprehensive suite of managed services for customers to help ensure the security, compliance and availability of all electronic messages.

Considered by many to be the most mature set of managed services for e-mail on the market today, FrontBridge currently serves more than 3,100 businesses world wide. Its technologies are available through the managed service industry’s largest distribution partner network. The acquisition represents a milestone for Microsoft in an ongoing commitment to listen and respond to its customers messaging needs. Microsoft will continue to work closely with FrontBridge’s partners and existing Microsoft partners on joint efforts to provide new services that meet key customer needs.

To get a better handle on the deal and what it means for the two companies, their partners, and customers, PressPass sat down with Steve Jillings, president and CEO of FrontBridge, and David Thompson, corporate vice president of Microsoft’s Exchange Server Product Group.

PressPass: Why did your companies decide to pursue this acquisition?

David Thompson, Corporate Vice President, Microsoft Exchange Server Product Group

Thompson: We wanted to provide customers with more choices in their efforts to secure corporate e-mail systems and meet the array of today’s regulatory compliance requirements. By acquiring FrontBridge, Microsoft can help customers ensure the security, compliance and continuity of their messaging infrastructure in a cost effective manner. Customers can get out of the business of being anti-virus or spam experts and instead spend their time on IT initiatives that move their businesses forward.

We are extremely impressed with the expertise that FrontBridge brings to the table. From a technology perspective, FrontBridge provides an unparalleled set of services for customers that helps address some of the biggest challenges and complexities businesses face with messaging environments today. The services FrontBridge offers, remove the complexity for customers by managing those services in a hosted environment.

There is also a large talent element to this. We were looking to find people that had experience running large-scale systems worldwide, and FrontBridge has demonstrated a great track record. Bringing in these talented people who have that experience was an important part of the decision as well.

Jillings: This relationship is absolutely great for our customers and the development of our technology. Combining the FrontBridge services and staff with Microsoft’s growing Exchange Server business presents an incredible opportunity for us to design and build better services that will help our customers effectively manage an increasingly complex messaging infrastructure. E-mail as a mission-critical application and the primary form of business communication, comes with an unfortunate downside. It introduces unprecedented security, compliance and disaster recovery risks. Managing these risks is not a core competence area for most organizations, and we’ve provided assistance to customers by enabling these tasks to be offloaded to trusted services.

By teaming up with Microsoft, we’ll be able to draw upon Microsoft’s large install base to reach more customers, take advantage of great technical experience and resources to grow our technology portfolio in ways that we’ve only dreamed of. It’s a good opportunity for both of our companies to extend our product lines and provide greater choice for customers. And I must say that I am excited for the chance to work with Dave and his team to grow services and solutions designed to protect business’ most critical communication tool – e-mail.

PressPass: You mention your customers’ big challenges with e-mail. What are those challenges, and how does this merger help address them?

Thompson: One challenge I hear over and over again from the customers I meet with is the burden IT departments face in dealing with e-mail archiving in order to conform to legal and governmental compliance regulations. While e-mail archiving is an acute strain, particularly for customers in the financial services, health care and the legal industries, all businesses today must maintain electronic records, which is a huge tax on their people and systems. What we found with FrontBridge is a mature model that combines services and tools to address head on the risks customers face in ensuring their corporate e-mail systems are secure and compliant. They simply sign up for the service and it takes the burden of data retention and e-mail protection off the shoulders of the in-house IT department.

Another key pain point is spam. It is a huge problem that leads not just to personnel distractions and lost productivity, but is a security threat as well, as the sophistication of phishing scams encapsulated in malicious e-mail grows. The same is true for viruses. As viruses evolve and change, it’s difficult for the IT professional, who is already overburdened, to also try and become the expert on the latest trends in antivirus protection. For example, I recently met with a leading manufacturer of audio, video and information technology products which needed to employ 22 spam analysts just to keep up with the deluge of junk e-mail employees were receiving every day. With the managed-services model, we believe this customer will be able to reassign those 22 people to projects that advance the business and increase their competitive edge, rather than simply keeping the messaging infrastructure running and out of trouble.

Steve Jillings, President and CEO, FrontBridge Technologies Inc.

Jillings: Another big challenge customers face with e-mail is maintaining employee productivity after a primary e-mail system outage. Hurricanes, electrical power outages and other unpredictable disasters can cause a primary e-mail system to be unavailable. Our distributed architecture provides customers with a secure web-based e-mail system that employees can use to send, receive and reply to e-mail, as well as view a 30-day rolling archive of messages.

We have customers in the legal industry who have used our e-mail continuity service to send out important client files during IT maintenance of the primary e-mail server. In the fast-paced legal world, attorneys need 24×7 access to e-mail and we help ensure this – even in the case of unforeseeable disaster.

One of the things that we heard consistently as we went through this process of talking to customers and partners is that businesses who had switched to the service were really happy with it for the simple reason that they didn’t have to worry about downtime anymore.

PressPass: How will these offerings fit within Microsoft’s existing Exchange Server business model?

Thompson: For Exchange, it’s a great complement for a lot of the same reasons we’ve talked about. If I’m an Exchange Server customer looking for better security in my messaging environment, I can choose to outsource this expertise to a third party to reduce overall costs by using FrontBridge’s managed services. This is a great benefit to Exchange customers who want to re-direct e-mail maintenance resources to start thinking about areas that directly impact growth for their business such as increasing customer satisfaction, driving innovation, and building greater infrastructure efficiencies.

There are also some nice features in Exchange that complement the service, specifically the journaling feature, which allows the archiving service to work really well within an Exchange environment. Finally, the message continuity capabilities of the FrontBridge service work well with a single-server Exchange environment. Now when a smaller company takes down Exchange for routine maintenance, its employees will still have access to their e-mail over the Web. That’s a feature we think small and medium-sized businesses running Exchange will find exceptionally useful.

PressPass: How will the deal impact existing business partners of both companies?

Thompson: It’s a great opportunity for our partners to provide an additional offering that their customers have been seeking – a fully managed service for e-mail archiving, spam filtering, virus scanning, encrypted e-mail, policy enforcement, and disaster recovery. In turn, FrontBridge has strong relationships with many telecommunications and OEM industry partners who resell the service. We expect this merger will offer many new opportunities to partners.

Jillings: Apart from the obvious benefits of teaming up with a software leader such as Microsoft, it will be business as usual for our partners. There will be no anticipated impact on their current operations; frankly, all we see is upside for our partners. We continue to be a partner-focused organization as we enter into this phase of our company’s existence, and that fits perfectly with Microsoft’s strong commitment to its partner ecosystem. Plus, as Dave mentioned, it creates a broader offering for partners to provide more choice and flexibility to their customers.

PressPass: How does the acquisition of FrontBridge relate to the recent acquisition of Sybari technologies?

Thompson: The acquisitions of both Sybari and FrontBridge demonstrate Microsoft’s commitment to bringing greater security to a customers’ e-mail environment, and also ensuring customers have a choice in terms of how these solutions are delivered. With the acquisitions of Sybari and FrontBridge, customers now have a choice of either an on premise or hosted anti-virus or anti-spam solution based on their preference. Depending on their situation, customers tend to prefer one solution over another. For example, customers that already have AV/AS technical expertise, and wish to maintain those skills in-house, can choose to run Sybari’s Antigen and Advanced Spam Manager products on premise. Other customers may choose to outsource this expertise to a third party to reduce overall costs, and will likely opt for FrontBridge managed services. Therefore, we would leave it to customers to decide which solution they feel is most optimal to protect them from malicious software, based on their business requirements.

In addition to the hosted AV/AS service, FrontBridge also offers hosted services in the areas of compliance and disaster recovery. Message Archive intercepts customers’ electronic communications, archives and indexes them for immediate monitoring, and provides search and retrieval capabilities. Active Message Continuity and Disaster Recovery provides a back-up messaging system that can be called into action at anytime in the event of an emergency, helping to assure your company will never lose an e-mail, even if your corporate network and e-mail servers are unavailable.

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