Wall Streets Take
Wall Street also sees consolidation coming. Neel Kashkari, an investment banker in Goldman Sachs Cupertino, Calif., offices said that there are a number of security-oriented mergers and acquisitions in the pipeline at present, driven largely by the demands of keeping up with increasingly sophisticated IT threats. "The big vendors will buy smaller, younger companies because they need the new capabilities these firms can offer, their customers are asking for more comprehensive products and the purchases will increase their revenues," Kashkari said.Another trend driving potential consolidation could be the continued investment in security technologies by companies working in other areas of the IT landscape, such as storage giant EMCs buyout of Authentica in March. Oracle plugs 36 holes in critical patch update. Click here to read more. Grisoft, a midsize anti-virus specialist based in the Czech Republic, announced a deal on April 19 to purchase rival Ewido Networks, a much smaller company with a different type of anti-malware applications engine. The deal, the terms of which were not disclosed, was helped along by the $52 million recently invested in Grisoft by chip giant Intel. Dennis Smith, director of Grisoft, predicted that such investment from outside the security sector, combined with the need for applications vendors to continue to broaden their offerings, is certain to drive more deals of the same nature. "The security market as a whole will undoubtedly continue to grow, but the increasing sophistication and speed of attacks makes it such that only those companies with enough resources to invest in their infrastructure to stay ahead of new threats will survive," said Smith. "In this case, we found a small but very aggressive company that has technology that handles anti-virus differently than our existing products; I think these are the sorts of deals that well see more of going forward." Indeed, the consolidators plan to keep hunting for deals. Israeli firewall specialists Check Point Software Technologies, which is under pressure from networking giant Cisco Systems, recently tried to buy security appliance maker Sourcefire, but the deal was shot down by regulators. "Were not sitting back and I would expect even more mergers and acquisitions to start closing, because the smaller companies with unique technologies can help companies fill gaps in their portfolios," said Ken Fitzpatrick, chief marketing officer for Check Point. Check out eWEEK.coms for the latest security news, reviews and analysis. And for insights on security coverage around the Web, take a look at eWEEK.com Security Center Editor Larry Seltzers Weblog.
"As long as hackers come up with new ways to steal data, new technologies to defeat them will be required. Since it is difficult for bigger vendors to innovate as quickly on their own, many of these new tools will be developed at young companies."