Application service provider (ASP) NetStore has acquired security reseller NetConnect to boost its services offering.

The NetConnect brand will be retained and there will be no redundancies. The value of the deal was not disclosed.

David Blundell, vice president of sales and marketing at NetStore, explained that there are benefits to NetStore in retaining the 14 year-old NetConnect brand as well as existing staff.

"NetConnect was living hand to mouth but we will use our strong balance sheet to invest in NetConnect to grow its business," he said.

NetStore, which used to sell its hosted IT services through resellers, abandoned the channel in September 2001 when it disbanded its channel team, but has acquired channel skills with this deal.

Blundell admitted that the company's flirtation with the reseller channel was a failure.

"All the analysts said that ASP was indirect and was SME - but it was not successful. We have gone back to our birth right of selling direct to large customers," he said.

NetConnect will remain as a division of NetStore, with parts of the business integrated into the ASP.

"We are looking to expand by customer acquisition and gaining new services that we can offer our existing customers," said Blundell. "NetConnect is a nice fit."

The reseller has a Checkpoint training division, managed services and integration capabilities.

Clive Longbottom, service director at analyst firm Quocirca, explained that the ASP cut its sales and development teams when it struggled to win business for its hosted services.

"It realised that the whole model was not working and went back to its Cisco back-up business," he said.

Longbottom added that hosted virtual private networks are likely to be a focus area for NetStore, and that the NetConnect acquisition fits this strategy.

"The market for hosted services is beginning to pick up and this acquisition is good for NetStore's security offerings," he concluded.