IBM buys Q1 Labs to expand in security software

(Reuters) - IBM Corp (NYSE:IBM - News) will buy security software provider Q1 Labs as it looks to expand in a market which has seen recent high-profile cyber attacks on victims from Sony Corp (Tokyo:6758.T - News) to the British police.

Last year, Intel Corp (NasdaqGS:INTC - News) paid $7.68 billion for data security firm McAfee Inc, and Hewlett-Packard (NYSE:HPQ - News) bought security software company ArcSight Inc for $1.5 billion.

Also on Tuesday, McAfee said it would buy NitroSecurity, a privately-owned provider of security information and event management tools. NitroSecurity and Q1 Labs, which is also privately owned, make software to help businesses analyze security logs and spot hacking threats and attacks.

IBM, which did not say how much it was paying for Q1 Labs, sees the security software and services business as a $94 billion market opportunity and has been buying analytics companies to beef up its security offerings.

In five years, it has spent more than $14 billion on 25 deals focused on analytics to help customers deal with the huge volumes of unstructured data from sources such as social media, biometrics and criminal databases.

In August, it bought British security analytics software firm i2, also for an undisclosed sum, and last month acquired Toronto-based risk analytics software firm Algorithmics for $387 million in cash.

Symantec Corp (NasdaqGS:SYMC - News), with a 19 percent share, dominated the global security software market -- worth $14.7 billion by revenue -- last year, according to research firm Gartner. McAfee followed with about a 10 percent share, ahead of Trend Micro (Tokyo:4704.T - News) and IBM, with 5 percent.

Waltham, Massachusetts-based Q1 Labs -- which provides software for collecting, storing, analyzing and querying log, threat, vulnerability and risk-related data -- will become part of IBM's newly-formed security systems division.

Q1 Labs, founded in 2001, has more than 1,800 clients globally, and counts Polaris Venture Partners, Menlo Ventures, BDC Venture Capital and Globespan Capital Partners among its investors.

Q1 Labs CEO Brendan Hannigan will head up the new IBM division, helping clients tackle corporate security breaches, growing mobile security concerns and advanced security threats.

IBM shares were down 1.3 percent at $171.04 on Tuesday on the New York Stock Exchange, underperforming the broader share market (DJI:^DJI - News), which was down 1 percent.