Security software's innovation engine
While most of the software industry is in slow-growth mode, the need for security software is skyrocketing. Between viruses, spam, spyware, and new federal laws demanding information confidentiality, the need for improved system security is growing fast, at a rate of 50% a year. And that means that small, innovative companies with good ideas are being swallowed up by major players in the software and communications hardware world.
Symantec, the #1 company in the computer security and maintenance software (it sells the Norton software suite) will buy Veritas Software, which makes backup and storage programs. Veritas owns around 40% of all the backup and archiving software market and over 60% of the market in file management software. Symantec is a leader, along with McAfee and Trend Micro in supplying computer security software. The $13.5 billion buyout would be one of the largest software mergers ever.
Recent Symantec purchases have include Brightmail (anti-spam), ON Technology (online software configuration and distribution), and SafeWeb (secure data links), all companies with software that protects computer operations. This year it also bought security consulting company @stake, an expert in security audits.
Microsoft recently bought Giant Company Software, a company with software for fighting junk mail and spyware. Over the past year, Microsoft has gotten into security in a big way, by buying up GeCAD Software, a Romanian antivirus software maker. There are also rumors that Microsoft will acquire McAfee, Symantec's biggest rival.
Cisco, the leading maker of hardware routers and other communication equipment, has bought five security companies over the past year. We'll deal with Cisco's amazing sequence of acquisitions in another entry.
Juniper Networks, which is Cisco's main competitor, bought Netscreen Technologies, which develops firewall software.
3Com, another major supplier of network products like routers and switches, has announced it will buy TippingPoint Technologies, another American company. TippingPoint offers a line of security software and firmware, including intrusion protection pieces.
Many of the acquirees are small Silicon Valley companies with small staffs. The pattern is that these companies have a great idea, write some software based on that idea, then wait to get bought out by larger companies whose innovation engine has slowed down but whose cash supply is immense. As typical software applications are pretty mature (who needs another word processor or spreadsheet?), security software, in its bewildering complexity, has become the area where there are real growth opportunities.
10:24:28 AM 
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