Cisco: Overcrowded Security Market Needs More M&A

Cisco Systems is telling Wall Street that corporate buyers of products for IT security want to restrict the number of their suppliers, prompting analysts to speculate on which company Cisco might buy next to gain market share.

"The analysis of Cisco suggests that the average large company has security vendors 54-plus, with Chief Information Officer deeming a landscape extremely difficult and complicated to manage," said UBS analyst Amitabh Passi in a research report. "We do not believe Cisco has some delusions of substitution of more than 50 suppliers with only himself, but the goal is to simplify the landscape."

Increase the market share of Cisco in the enterprise security infrastructure $ 25 billion from 9% to 20% -30% is a target of incoming CEO Chuck Robbins, he says Passi.Many large technology companies and defense are jumping more deep in the security market against race leader of the game, like Check Point Software Technologies, Symantec, Fortinet and Palo Alto Networks.

Tim Long, an analyst at BMO Capital Markets, recently met with top corporate executives of Cisco security.

"Cisco believes that one of the major changes that occur in the sector in the coming years is that customers can always switch providers points that provide niche solutions for companies that can provide an architectural approach," Long wrote in a report Monday. "Cisco expects that the changes will become necessary, because some customers currently working with as many 100 different security providers in a single organization.

"This should also drive greater consolidation in the industry." Steps doubts that Cisco would buy a large security vendor like Palo Alto or Check Point, despite its $ 2.7 billion acquisition of Sourcefire in 2013. He predicts smaller offerings, such as $ 635 million deal for Cisco OpenDNS, announced on 30 June.

"We expect both organic investment and M & A play a role in the acceleration of sales and market share growth," said Hand. "The fastest growing sub-segments in the security sector in which Cisco has limited to no presence, and are therefore areas of interest, with identity and access management, Siem, data loss prevention ,. And test application security" Cisco Systems stock was a fraction, near 28, in midday trading in the stock market today.