Editor’s note: Symantec’s “decisive and bold” acquisition of Blue Coat creates a new market share leader in the enterprise security space, vaulting past IBM. Here’s a look at what’s happening in the security space from Technology Business Research Analyst Jane Wright.
HAMPTON, N.H. – Two complementary companies join forces to capture market leadership through Symantec’s announced acquisition earlier this week of Blue Coat Systems.
Although Symantec holds the second-largest share of the enterprise security market in revenue, its revenue and customer growth rates have been decelerating at an alarming rate, putting the vendor at risk of dropping to the No. 4 position by 2020, according to TBR’s Enterprise Security Market Forecast, 2015-2020.
Yet in a decisive and bold move, Symantec potentially reverses its outlook with the announcement that it intends to acquire security vendor Blue Coat Systems.
Although Symantec stumbled with its last significant acquisition (Veritas), TBR believes Symantec’s acquisition of Blue Coat will prove much more successful. The two companies’ complementary portfolios and diverse partner ecosystems will create revenue and margin growth for Symantec and a more relevant and comprehensive portfolio for customers.
After the acquisition is completed next quarter, Symantec will surpass the market share leader, IBM, while putting new competitive pressures on another market titan, Check Point.
- Symantec with Blue Coat will surpass IBM in enterprise security market share
IBM has been the enterprise security market leader for the past three years, according to TBR’s 4Q15 Enterprise Security Benchmark, but Symantec’s acquisition of Blue Coat will disrupt this position and compel IBM to turn its attention to endpoint security.
While IBM has one of the most comprehensive security portfolios in the market, it lacks a key offering in endpoint security — the segment where Symantec has had the most success to date. Until now, IBM has focused its resources on larger security information and event management, identity and access management, and security analytics opportunities, but TBR believes IBM will consider acquiring an endpoint security vendor such as CounterTack or SentinelOne to lessen Symantec’s growth under Blue Coat leadership.
Check Point Software Technologies will also be impacted by Symantec’s move. The 23-year-old security vendor has achieved moderate, consistent high-single-digit revenue growth on a broad portfolio including network security appliances, endpoint and mobile antimalware blades, and web gateways, holding the No. 4 share position in enterprise security revenue. But Check Point has not adapted its portfolio or delivery models as quickly as some competitors, such as Blue Coat, to address growing customer demand to protect cloud-based workloads with cloud-based services.
Blue Coat, with its acquisition of Elastica in 2015, will give Symantec fast access to more sought-after security solutions, including cloud access security brokerage, and security analytics and incident remediation for cloud-based applications.
- Forecasted Performance Metrics of Key Security Vendors, 3Q16
Symantec: $480 million
Symantec with Blue Coat: $616 million
IBM Security: $588 million
Check Point: $436 million
- Enterprise Security Revenue, Year-to-year Growth
Symantec with Blue Coat: 28%
Check Point: 8%
- Number of Enterprise Security Employees
Symantec with Blue Coat: 8,550
Check Point: 3,450
Source: TBR estimates
Cisco, the No. 3 share holder in the enterprise security market according to TBR’s estimates, will be impacted less by Symantec’s acquisition of Blue Coat, as neither Symantec nor Blue Coat are focused on the network security segment where Cisco earns most of its security revenue.
- Symantec ensures its relevance in customers’ security deployments
To reduce complexity and improve security efficacy, many SMB and enterprise customers are reducing the number of security vendors they use. Prior to this announcement, Symantec’s portfolio addressed only a small portion of customers’ security requirements, notably endpoint malware protection and data loss prevention. Many of Symantec’s recent declines were due to the challenges of shifting its traditional security portfolio and delivery model to address customers’ changing security requirements.
With the acquisition of Blue Coat, Symantec’s portfolio will expand to address more of customers’ most pressing security concerns, such as SaaS usage monitoring and security analytics. This will enable customers to fulfill more of their security requirements from Symantec while helping the vendor retain its large customer base and increase its average deal size.