A Work in Progress:
Consolidation in the Security Market
As the fog of worldwide recession lifts, cash flush
security and hardware vendors have found themselves with money to burn. Stephen Pritchard examines how mergers and acquisitions are shaping the information security industry
I
n 2011, the global spending on cybersecurity reached US$60bn, according to estimates from
PricewaterhouseCoopers (PwC), the business advisory fi rm. The fi rm expects that fi gure to grow by 10% annually over the next three to fi ve years.
Continued growth in the sector – and the fact that security spending by business and government appears to be relatively immune to the cyclical swings that affect other areas of IT – is also making the market an attractive one to investors. PwC, for example, says that companies will continue
to spend on security, because of “growing threats and awareness”, and because of the need to provide security in areas such as mobile and cloud computing.
This, in turn, has made the information security industry a hotbed of corporate activity. Total deal activity since 2008, as measured by PwC in its report ‘Cyber Security M&A: Decoding Deals in the Global Cyber Security Industry’, amounts to more than $22bn. The fi rst six months of 2011 brought 37 deals, worth $10bn altogether. The largest deals involved US- and UK-based security vendors.
Over the years, this has led to a number of mega-deals, including Symantec’s purchase of Veritas, EMC2
’s purchase of
RSA and most recently, Intel’s acquisition of McAfee. The nature of the security industry, however, means that it remains more diversifi ed, and more open to smaller vendors, than many others.
Think Small
One reason for this, insiders suggest, is the constantly changing threat landscape; another is the close relationship between information security and both academic
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