Security Market Boom?

Symantec, Check Point financial results latest indication of robust security sales

If you pick up a copy of your local newspaper, you are likely to become depressed. There are protests like "Occupy Wall Street" going on throughout the U.S. as unemployment hovers around 9% nationally and is over 13% in some states like Nevada. Meanwhile, European powers are knee-deep in debt as they seek to bailout Greece and prepare for future problems in Italy, Portugal, and Spain.

It's a gloomy macro economic outlook but the sun happens to be shining in my little domain of information security. Yesterday, Symantec reported record revenue for its fiscal quarter, up 14% year-over-year. Furthermore, security and compliance revenue was up 27% year-over-year. Symantec also highlighted double-digit growth in DLP and better than expected authentication revenue from the Verisign businesses it acquired in 2010. Symantec is not alone. Last week Check Point also reported record revenue for 3Q 2011 while Fortinet beat Wall Street estimates for both revenue and earnings.

There is other corporate behavior indicating a healthy security market like Dell's acquisition of Secureworks in January, IBM's plans for a new security systems division, and HP's renewed focus on enterprise security.

What's going on? Sophisticated threats are increasing, old tactical security technologies are no longer adequate, and there is a shortage of highly-skilled security professionals. The bad news is that data breach and cyber attack risks go up each day. The good news is that security vendors with the right products and services are poised to make a lot of money.

A few other thoughts here:

1. I wouldn't be surprised to see a lot more acquisitions soon. Oracle and Microsoft may want to dig deeper into security opportunities both within and outside of their core coverage areas. The same could be true for companies like BMC, Compuware, and Quest Software.

2. Security skills shortages and a dangerous threat landscape will drive a lot of professional and managed security services growth throughout 2012. Good news for companies like BT, Unisys, and Verizon.

3. Security vendors offering tactical tools will find it harder and harder to compete in the enterprise. We are in the midst of a transition to tightly-integrated enterprise security suites. For those with grey hair like me, think of the migration from departmental applications to big ERP from Oracle and SAP. This is why HP bought ArcSight, IBM grabbed Q1 Labs, and McAfee acquired Nitro Security.

4. Look for a new and more granular focus on network security. Combating things like APTs requires packet capture and analysis, traffic monitoring, payload analysis, network egress monitoring, and vastly improved network forensics. Good news for Cisco, Juniper, RSA/NetWitness, and Sourcefire.

• Security
• ArcSight
• BMC
• BT
• Check Point Software
• Cisco
• Compuware
• Dell
• DLP
• Fortinet
• HP
• IBM
• Juniper
• NetWitness
• network security
• Nitro Security
• Q1 Labs
• Quest Software
• RSA
• SecureWorks
• Sourcefire
• Symantec
• Unisys
• VeriSign
• Verizon