The Ashimmy Blog: Why do so many security companies go in the woods?

The answer is because like the proverbial bear - they can. The same answer applies to Bill Brenner’s question over at CSO online regarding the “aggravating” and “over-saturated” security market. The reason there are so many security companies is because there can be. Don’t get me wrong. Not all of these companies will have a happy ending. Some will shutter down for good, others will be sold at less then hoped for “fire sale” prices - washing their investors in red ink, still others will earn respectable returns by being acquired by a larger fish and finally some will make it to the promised land of IPO (or in the present environment, profitable sustainable powers in the security market – Fortinet comes to mind).

Rather then engage in reading entrails or star charting about which companies would make good matches for other companies to acquire though, lets look at the real reasons why there are so many security companies:

1. There is a wide range of security technologies filling a wide range of needs – There are so many aspects to security and the task is so difficult that is increasingly impossible for any one company to have the breath and depth to do them all well (McAfee is a perfect example). This jack of all trades, master of none security reality guarantees that there are constantly going to be “specialists” who do a particular aspect of security and do it well. Better in fact then any of the jack of all trades would ever be able to. As long as people will pay for a best-of-breed solution for any given niche in security, there will be security companies lined up looking to fill that niche.

2. We have a built in minor league or development league model in security to foster innovation – The fact is that most of the larger security companies do a lousy job at innovation. In fact so lousy that they have almost totally abandoned it. Instead they concentrate on building a pipe to customers. Once they have that big pipe into a customer base they snap up promising innovative products from smaller companies to pump into those pipes. Some of those companies are small start ups, some are medium sized companies that either have grown organically or have themselves snapped up smaller fish. Regardless, as long as the bigger companies rely on buying smaller companies for innovation, you will see smaller companies proliferating. In the end the consumer of these products and services are the winners. The more companies trying to ways to solve problems, the more choice and competition is placed in the market which lets the best rise to the top.

3. There is no perfect way to solve the issues – Some of the challenges we face in the security market are so complex that there does not exist a clear, dominant way of solving them. Instead we see endless variation and experimentation in trying to get to the best of way of solving a given issue. Without clear cut ways of solving the problem, the experiments and competing methods of attacking the issue lend themselves to a wide range companies coming to market with their own takes on solving the problem.

So while it may be fun to speculate on who would match up well with whom, it would not solve the “problem” that Bill sees. As soon as some of these companies would merge, their would be two, three or more to take their place. It is evolution at work.