Episteme

Mike's random thoughts and ramblings

Sayonara X-Force

Consolidation in the security industry continues... ISS got bought today by IBM.

The purchase price was about $1.3bn - quite a decent number for ISS, especially since they've been a bit in decline over the past few years. Their scanner went into disrepair, X-Force lost most of their key talent, and others (esp. Cisco & McAfee) took share from them in the ISS/IPS world. It's not like 2000 when RealSecure was the best IDS out there by a decent margin, and X-Force was the most bad-ass research team around.

What's interesting is how the world has changed in terms of acquisition prices... in the early phases of consolidation, we saw huge multiples - as an example, Cisco purchased Okena at a 22:1 price/revenue ratio.

However, this one's only at about a 3.5:1 multiple - what does that mean for the network security industry over the long run? Does it suggest that we're less vital as a strategic part of a product portfolio? Most importantly, what does this mean for the acquisition prospects of the smaller companies that still exist out there whose VC's are looking to pull in 7-10 times multiples

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Michael Murray

Michael Murray