(Note: this is a static image from October 8, 2008)
As I ramp up the research activities of IT-Harvest I have polled over twenty vendors on their health. Now, mind you, vendors *always* tell analysts that they are doing great. They have to. But you can filter their responses based on past statements and check them against each other and end users. At least according to security vendors the third quarter this year was a good one. Most are claiming 30-40% growth over last year's third quarter.
Ellen Messmer looked into this a couple of weeks ago. Her article highlighted the changes coming to IT investment because traders were getting gobbled up by commercial banks. The IT requirements of a bank are different. My own straw poll reveals that while some programs may be halted or suspended on Wall Street the long term spending plans on security projects are still intact.
I interviewed Doug Camplejohn, CEO of MI5 Networks this morning. He summed it up by quoting a customer at a large bank:
"I have 50 projects to fund. If you are number 50 you have something to worry about. If you are in the top 5 - no problem."
Doug reports that the project for deploying his Web security gateway products was in the top 5.
Taher Elgamal, CTO of what was Tumbleweed Communications and is now part of Axway, confirmed that he did not see any immediate decrease in IT security spending. Taher, known for his work with Netscape to create SSL, is also an involved industry observer.
That said, take a look at the fall off in market cap of the publicly traded security companies. By my count the nine pure plays are off 39% in market cap from their 52 week highs. While these are scary numbers they are actually in line with the drop in the NASDAQ composite index this year.
One more thought. Times such as these, with dramatic instability in financial markets, are when increased security diligence is required. A data loss, a major breach, or even an attack on an exchange could have devastating repercussions. At the same time, increased regulatory oversight will lead to increased investment in security. The fundamental drivers for security investment are not coupled to financial markets.
While I cannot speak to stock prices and investment strategies, my take is that security spending will not fall off in total this year or next.
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Richard Stiennon is a security industry analyst. He is currently consulting, speaking and writing on all manner of security topics for IT-Harvest, the IT research firm he founded to cover the security space. He was most recently chief marketing officer for Fortinet. He has served stints at PricewaterhouseCoopers, Gartner, and Webroot Software.
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