Page 69 - CDM-Cyber-Warnings-March-2014

Nokia Security Appliance division and the Face Time application in 2009, Liquid Machines in 2010, and Dynasec in 2011, it can’t be considered an aggressive acquirer. Maybe Trustwave will emerge as that player. After all it has made 8 acquisitions since 2009, including two in 2013: Application Security and SecureConnect, despite the fact that it is a private company and becoming one of the most active acquirers in the industry. It did file for an IPO in April 2011 yet still remains a private company today. This makes it harder to be an acquirer because you don’t have the funds from the IPO to make cash purchases and purchasing with private company stock is challenging. Maybe the reason there hasn’t been a Cisco-like company in cybersecurity has more to do with the mentality of companies in the industry than it does with the business model itself. The model, after all, is centered on a time-to-market mentality as the lynch pin for success. Because of the increasing variety of threats, development cycles should be less than 18 months. The fragmented cybersecurity market illustrates that the bigger companies find that time frame challenging and smaller companies are the ones best suited to deliver quickly. History indicates that we are in for a period of acquisitions and Hewlett-Packard is a prime example of that. Will Hewlett-Packard become the next dominate acquirer in this market? Not likely, they’re too big already. How about Symantec or McAfee? Their challenges are keeping abreast of current technologies that essentially render the very technologies they were built upon, traditional anti-virus and firewalls, obsolete. We are not likely to see a company implement Cisco’s initial growth strategy in the cybersecurity market because the resulting growth rates are not strong enough. Can we expect increased M&A activity? Absolutely. Investment is flowing to start-up and early stage companies. The IPO market has improved. The economy is improving and companies need to accelerate their growth and catch up on historically under- funded R&D. We will see the traditional companies making acquisitions but we will also see companies outside of the cybersecurity market making acquisitions in the security space as security becomes a bigger issue for everyone. " # % " $ " # ! !