Embed Doc
Copy Link
Readcast
Collections

CommentGo Back

Download

Dataquest

Publication Date: 15 July 2011 ID Number: G00214148

© 2011 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or itsaffiliates. This publication may not be reproduced or distributed in any form without Gartner's prior written permission. Theinformation contained in this publication has been obtained from sources believed to be reliable. Gartner disclaims allwarranties as to the accuracy, completeness or adequacy of such information and shall have no liability for errors,omissions or inadequacies in such information. This publication consists of the opinions of Gartner's research organizationand should not be construed as statements of fact. The opinions expressed herein are subject to change without notice.Although Gartner research may include a discussion of related legal issues, Gartner does not provide legal advice orservices and its research should not be construed or used as such. Gartner is a public company, and its shareholders mayinclude firms and funds that have financial interests in entities covered in Gartner research. Gartner's Board of Directorsmay include senior managers of these firms or funds. Gartner research is produced independently by its researchorganization without input or influence from these firms, funds or their managers. For further information on theindependence and integrity of Gartner research, see "Guiding Principles on Independence and Objectivity" on its website,http://www.gartner.com/technology/about/ombudsman/omb_guide2.jsp

Market Trends: An Ever-Consolidating Security MarketNever Consolidated

Ruggero Contu

The information security market vendor landscape keeps evolving. While merger andacquisition (M&A) activity has been a constant factor during the years, the market is farfrom reaching a consolidated status, in which more than 60% to 70% of the marketshare is owned by the top five vendors. This is because the consolidation at the top iscontrasted by an expansion of the market at the bottom.New players bring innovative technology solutions to cater for end-user requirementsthat in turn are created as a result of the new threats, often introduced by cybercriminalstaking advantage of new vulnerabilities being created by changes to IT ecosystems.

Key Findings

Constant and intense M&As in recent years, such as the recent VeriSign acquisition bySymantec, has driven larger players to grow revenue and expand their product portfolio.Despite M&A activity, the market is still highly fragmented, with only about 44% of themarket share belonging to the top five vendors.Market expansion and innovation are driven partly as a result of new startup playersentering the market.

Recommendations

CEOs and CTOs from startup companies looking to be acquired should focus on provingtechnological effectiveness and customer success rather than profitability.Marketing managers from companies with an expansion strategy must investigate themost suitable option between acquiring or partnering, as both present risks andadvantages.The head of strategy should consider the partnering option before moving toward anacquisition because this offers the ability to test technology capabilities as well as theopportunity to integrate products.

TABLE OF CONTENTS

Trends in the Market .................................................................................................................... 3

Impact of M&As on the Security Market............................................................................ 3

Market: What Drives M&As ........................................................................................................... 4

Market Structure: A Consolidation Life Cycle ................................................................................ 5

Contrarian View: Marked Consolidation With Stabilization of Threat Landscape ............................ 5

Vendors to Watch ......................................................................................................................... 6

Conclusions ................................................................................................................................. 9

LIST OF TABLES

Table 1. Market Share Trend, Top Five Vendors, 2006 Versus 2010 ............................................ 3

Table 2. Major Examples of M&A Activity, 2007-2010 ................................................................... 7

TRENDS IN THE MARKET

Impact of M&As on the Security Market

The security market has experienced a high degree of M&A activity in recent years. This activityhas been transforming the market landscape, enabling some players to gain significant marketshare and presence over others. As a result of these events, many small, midsize and largetechnology providers have disappeared as independent players from the market. However, thesecurity space has been kept alive and regenerated by a continuous flux of innovation and newproducts, often brought by startup companies targeting newly emerging threats; some of thesecompanies manage to build good business models before eventually being purchased or growingthemselves either organically or through acquisitions of their own.Some level of market consolidation has occurred in the security space in the past, with manymidsize and large players expanding their product offerings and portfolios through a number ofacquisitions of point product players. The security products from existing vendors have alsocontinued to expand. This is particularly the case in the security software arena where, whilelarger players have been active in acquiring competitors and niche vendors, the market hascontinued expanding, resulting in a decline in the concentration of market share among the topplayers. A comparison between 2006 and 2010 data shows that the aggregated market share ofthe top five leaders shrinks from 60% to 44%; see "Market Share: Security Software, Worldwide,2007" and "Market Share: Security Software, Worldwide, 2010."Confirmation of the interestingly low level of consolidation in the security software market(considering security is dominated by fairly mature technologies, such as antivirus) can be seenin a comparison of the overall enterprise software market

—

in which the average level ofconsolidation among the top five vendors is above 55%

—

versus 44% of the security softwaremarket. The difference is even greater when looking at the security software market

—

excludingthe consumer sector

—

in which case, only 35% of the market share in 2010 can be attributed tothe top five vendors.

Table 1. Market Share Trend, Top Five Vendors, 2006 Versus 2010

Vendor2006 Security SoftwareMarket Share (%) Vendor2010 Security SoftwareMarket Share (%)

Symantec 29.5 Symantec 18.9McAfee 12.3 McAfee 10.4Trend Micro 8.1 Trend Micro 6.3IBM 5.3 IBM 4.9CA 5.0 EMC 3.8

Total

60.0

Total

44.3

Source: Gartner (July 2011)

The main reason for this trend is that established leaders are losing market share to smallerplayers, many of which were startups that developed new offerings to meet newly introducedthreats and vulnerabilities, or they implemented a successful go-to-market strategy, builtthemselves a niche presence and gradually took market share away from incumbent vendors.ArcSight, ESET and Kaspersky Lab are practical examples of startups that managed to gain afoothold and become significant competitors in the security market and gain market share. Similarto other related markets, such as the IT operations management market, security relies a greatdeal on innovation from startup companies, which is particularly the case with a continuous influx