Analysts have long speculated that the over-crowded and buoyant computer security sector is ripe for consolidation. Now, it seems, their predictions are coming true in spectacular fashion.
The spate of security sector deals in January continued in February. Networking systems giant Cisco led the rush to strengthen security coverage with its purchase of start-up Okena for $154 million in shares.
The transaction underscores Cisco’s growing interest in security software and hardware – the company already sells $1 billion a year in firewalls, secure access controllers, virtual private network systems, and other security products. However, the hefty price and Okena’s pioneering work in ‘prevention detection’ software suggest that Cisco is gearing up to disrupt some of the traditional computer security markets, notably the firewall arena where Check Point Software dominates.
Okena was founded in 1999 by managers and developers from firewall maker Raptor after it was acquired by Axent Technologies (later to become part of Symantec) for $245 million. They maintain that traditional security software and hardware plays too passive a role when it came to security attacks. Their response? The development of an intrusion prevention product that can anticipate threats and respond accordingly (rather than just block intruders as in the case of firewalls).
Okena is perhaps the most prominent of a number of intrusion prevention software start-ups in a market that is tipped for explosive growth. According to the Yankee Group, demand for such products will rise from an estimated $62 million in 2002 to $520 million by 2007.
An equally intriguing deal in February was Microsoft‘s swoop on Connectix‘s emulation and virtual machine division.
Connectix is best known for Virtual PC, a product that emulates Windows on an Apple Macintosh. However while Microsoft’s Macintosh Business Unit will adopt this product, the real prize is Virtual Server, which will enable users of Microsoft Windows Server to run multiple instances of the operating system on the same machine.
This is key to the company’s plans to get users of Windows NT 4 to migrate to its forthcoming Windows Server 2003 operating system, due for release in the summer. Using Connectix’s technology, Microsoft will be able to offer Windows NT 4 emulation under Windows Server 2003 running on a separate partition. Many NT 4 users have refused to budge on the grounds of cost and the fact that they have critical applications running on Windows NT 4 that may not run on later Windows server software.
The move will also enable Microsoft to pitch its software at the burgeoning server consolidation market, which has coalesced around Unix and Linux because those operating systems can offer advanced partitioning capabilities that have been hitherto absent from Windows.