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Data Sheet—Tuesday, April 14, 2015

Good morning, Data Sheet readers. Security startup Illumio and cloud “container” company Docker have closed massive funding rounds. IBM is committing at least 2,000 employees to a new healthcare analytics division. Plus, Microsoft CEO Satya Nadella has rehired an experienced alumnus to advise him on emerging technologies.

If you enjoy this newsletter, encourage someone you know to sign up. While I’m at it, you should also check out Fortune’s three other morning missives: Broadsheet (our view into the world’s most powerful women), Term Sheet (for exclusive insights into the venture capital community and the day’s biggest deals), and the newly made-over CEO Daily (curated by Fortune editor Alan Murray).

TOP OF MIND

You are the weakest link. New studies from Verizon and Symantec confirm what we already knew: most security attacks really aren’t that sophisticated. They are abetted by very human mistakes—such as a decision to click on a mysterious email link, a failure to keep software up-to-date, or simple errors in equipment configuration. By the way, Verizon thinks the cost of an average breach is now around 58 cents per record.

TRENDING

Together, are two weak networking companies better than one? Finland’s Nokia would like to test the theory. It’s in “advanced discussions” to buy France’s Alcatel-Lucent.

Microsoft CEO taps former exec as key advisor. After retiring two years ago amid a huge restructuring, Kurt DelBene was integral to the Healthcare.gov fix-it team. He just became Satya Nadella’s executive vice president of corporate strategy and planning. His job description: “focus on identifying future investments and opportunities,” plus the not-so-simple task of seeing them through to fruition.

HP: No, our public cloud plan is “unchanged.” The company believes comments made by a senior strategist to The New York Times were misinterpreted. At the very least, the company will continue to nurture the Helion offering to support hybrid cloud environments for big companies.

The Qualcomm quandary. Considering the close relationship between the company’s chip business and patent-licensing group, splitting the company in two would be complicated. The timing isn’t great: Qualcomm and others are under pressure to reduce royalties for technologies that are part of industry standards.

$95 million for cloud ‘container’ company Docker. The fast-rising software startup sells specialized virtualization technology that makes it simpler to develop and manage corporate applications. One high-profile early customer is Goldman Sachs. Its latest round was led by Insight Venture Partners.

DEAL OF THE DAY

Upstart Illumio raises $100 million to protect from within

Most companies use firewalls, intrusion detection systems and other so-called ‘perimeter’ security defenses. Far fewer can effectively detect malicious software that has breached that wall.

Two-year-old startup Illumio, which counts Morgan Stanley and Plantronics as reference accounts, wants to help security teams concentrate more closely on activity within the data center.

Although it emerged from stealth only six months ago, the Sunnyvale, California, company’s early sales momentum just helped it close a $100 million financing round. Illumio has also forged a high-profile partnership with F5 Networks that gives it more credibility as a data center security option.

Illumio’s high-level mission is to “reduce the surface area of attack.” Its technology monitors sanctioned relationships between different applications and databases, and sending an alert when something acts out of the norm. That means short-handed security teams aren’t stuck manually analyzing reams of data in search of potential threats.

“This is now a board-level issue, it’s a company-level issue, and it has a dynamic that it has never had in the past,” said Illumio co-founder and CEO Andrew Rubin. “It’s required in order to enable them to do business, it’s also unbelievably important in terms of managing their risk. Security as a whole is becoming completely rethought.”

That mantra apparently has widespread appeal. The funding round disclosed Tuesday includes new investors BlackRock Funds and Accel Partners, along with existing backers Formation 8, Andreessen Horowitz, and General Catalyst. Microsoft Chairman John W. Thompson, Salesforce CEO Marc Benioff, and Yahoo co-founder Jerry Yang also participated.

“The wide range of investors supporting Illumio reflects the company’s strong traction with Fortune 500 customers, the innovation of its policy and enforcement approach, and the magnitude of the problem it solves,” said Thompson, who is an Illumio board member.

The infusion will fund research and development, a sales team expansion, and a branding campaign. The 100-person company already has offices on both coasts, and is planning offices in Chicago, Boston and the Raleigh-Durham corridor in North Caroline. Illumio also plans to build a presence this year in Asia and Europe, doubling its workforce by the end of 2015, Rubin said.

Illumio’s technology works across cloud services such as Amazon Web Services and Microsoft Azure, or within more traditional data centers. Given the complex nature of most corporate computing environments, that’s important.

“The more heterogeneous their approach, the more this makes sense,” said Alan Cohen, Illumio’s chief commercial officer. “You’d be shocked by how many Windows servers are still in production.”

The latest round brings Illumio’s total funding so far to $148 million. Rubin brushes off questions about its valuation: “nobody inside of Illumio today is doing this for any other reason than to be a standalone platform and public company, period.”

Along the way, it will face competition from the likes of vArmour, which also monitors server-to-server traffic for better security insights. That company is backed with $42 million.

THE DOWNLOAD

IBM takes more holistic approach to healthcare

Its data analytics software already figures in prominent medical research trials with the Cleveland Clinic, Mayo Clinic, and Sloan Kettering. Now, IBM is turning the underlying Watson technology into a cloud service, Watson Health Cloud, it will sell to doctors, hospitals, insurers and patients. That offering will be the centerpiece of a new dedicated, Boston-area business unit, IBM Watson Health.

“We are going into the healthcare business in a big way,” IBM Senior Vice President John Kelly told Fortune. “We all recognize that outcomes aren’t what we hope for. Costs are skyrocketing. On the other side, so much data is collected. … We want to provide better insights, for better outcomes.”

IBM estimates that between electronic medical records, digitized diagnostics, and wearable medical devices, the average person will leave a trail of more than 1 million gigabytes of health-related data in their lifetime. The goal of IBM’s new business unit is to turn that information into something useful.

“This platform, in the not so distant future, will become the largest site of healthcare data in the world,” Kelly said.

Apple, Johnson & Johnson, and Medtronic are three prominent early partners that will use Watson Health Cloud as the foundation for their own medical intelligence services. The platform will underlie Apple’s HealthKit and REsearchKit applications; J&J will use it to create mobile apps that coach caregivers on pre-operative and post-operative procedures; and Medtronic will create a service for diabetes patients.

“We have a line at the door,” Kelly said, hinting that additional partnerships are soon to come.

Read more about IBM’s new business division.

ALSO WORTH SHARING

Chinese banks still buying domestic. Ongoing tensions over cyber surveillance hasn’t eased, which is making sales tough for U.S.-based companies including Apple, Google, IBM, Microsoft and Oracle. The latest development: a letter urging Chinese officials to remember their “international trade obligations.” Commerce Secretary Penny Pritzker is in China this week driving the point home.

First official legal challenge to net neutrality. As promised, the United States Telecom Association is protesting the FCC’s right to regulate Internet service providers like utilities. The move came shortly after the rule was formally published in the Federal Register, and more litigation is imminent.

Zenefits prevails in Utah, where the disruptive software startup’s sales model ran afoul of insurance regulations.

eBay fills three senior leadership posts. Joining “CEO-designee” Devin Wenig’s team are former executives from Home Depot, Agilent Technologies, and the New York Stock Exchange.

Duo Security raises $30 million. The access-control company’s Series C funding was led by Redpoint Ventures. It brings total funding to approximately $48 million.

Pharma giant sues medical apps startup. Sanofi isn’t happy with Diagnosia’s decision to publish all the side effects for one of its painkillers (Metamizole). The company’s software is used by doctors and hospitals to research and choose medications.

 

MY FORTUNE BOOKMARKS

5 things you don’t know about the wage gap by Jaclyn Trop

Picsart, a mobile photo-editing app, to raise $15 million by Leena Rao

China has weaponized its Internet with the ‘Great Cannon’ by Robert Hackett

Got spare change? This new app will invest it in Bitcoin for you by Kia Kokalitcheva

ONE MORE THING

These robots work well with humans. Sensors and cameras can halt their operation in factories if someone gets too near—a big boost for safety.

MARK YOUR CALENDAR

Knowledge15: Automate IT services. (April 19 – 24; Las Vegas)

RSA Conference: The world talks security. (April 20 – 24; San Francisco)

Forrester’s Forum for Technology Leaders: Win in the age of the customer. (April 27 – 28; Orlando, Fla.)

MicrosoftIgnite: Business tech extravaganza. (May 4 – 8; Chicago)

NetSuite SuiteWorld: Cloud ERP strategy. (May 4 – 7; San Jose, California)

EMC World: Data strategy. (May 4 – 7; Las Vegas)

SAPPHIRE NOW: The SAP universe. (May 5 – 7; Orlando, Florida)

Gartner Digital Marketing Conference: Reach your destination faster. (May 5 – 7; San Diego)

Cornerstone Convergence: Connect, collaborate. (May 11 – 13; Los Angeles)

Cloud Foundry Summit: Open source development. (May 11 – 12; Santa Clara, California)

Annual Global Technology, Media and Telecom Conference: JP Morgan’s 43rd invite-only event. (May 18 – 20; Boston)

Signal: The modern communications conference. (May 19 – 20; San Francisco)

MuleSoft Connect: Tie together apps, data and devices. (May 27 – 29; San Francisco)

MongoDB World: Scale the universe. (June 1 – 2; New York)

HP Discover: Trends and technologies. (June 2 – 4; Las Vegas)

Hadoop Summit San Jose: Mainstreaming adoption. (June 9 – 11; San Jose, California)

Red Hat Summit: Energize your enterprise. (June 23 – 26; Boston)

Brainstorm Tech: Fortune’s invite-only gathering of thinkers, influencers and entrepreneurs. (July 13 – 15; Aspen, Colorado)

LinuxCon North America: All about open source. (Aug. 17 – 19; Seattle)

VMworld: The virtualization ecosystem. (Aug. 30 – Sept. 3, 2015; San Francisco)

Dreamforce: The Salesforce community. (Sept. 15 – 18; San Francisco)

BoxWorks 2015: Cloud collaboration solutions. (Sept. 28 – 30; San Francisco)

Workday Rising: Meet and share. (Sept. 28 – Oct. 1; Las Vegas)

HP Engage: Big data, big engagement. (Oct. 4 – 6; San Diego)

Gartner Symposium ITxpo: CIOs and senior IT executives. (Oct. 4 – 8; Orlando, Florida)

Oracle OpenWorld: Customer and partner conference. (Oct. 25 – 29; San Francisco)