Twenty emerging security vendors -- selected from a batch of 136 start-up applicants -- displayed their wares in a showcase designed to let government and private companies see the newest security technology. Such small vendors will likely be the catalysts that effect change in the current -- and often ineffective -- enterprise security model, experts said at the conference.
There are about 1,000 vendors in the security space, according to John Muir, managing partner of the Trusted Strategies consulting firm and deputy director for research at SINET, a consortium of public and private security entities. Some 104 public companies account for approximately 85 percent of the $28 billion of annual global security revenue, and 75 private companies account for another 11 percent.
"That means there are over 800 small vendors out there that generate less than 5 percent of the industry's revenue," Muir said. "There is about a 20 percent turnover in the vendor base each year. But that's where a lot of the new technology is coming from."
In a panel at the conference, executives from four of the security industry's most active venture capital investors offered a closer look at the business end of emerging security technology. Robert Ackerman, founder and managing director at Allegiance Capital, noted that in 1981 more than 70 percent of research and development was done by vendors with 25,000 employees or more, and less than 5 percent was done by vendors with fewer than 1,000 employees.
Today, vendors with fewer than 1,000 employees do more than a third of research and development in security technology, outpacing the R&D done by the largest vendors, Ackerman said. "There's been a shift in innovation from large companies to small," he said. "The role of innovator has fallen to companies that don't have a legacy and are willing to look at the problems in new ways."
And although the economy continues to struggle, there is an opportunity for small vendors to get funding and make a dent in the security space, said Asheem Chandna, a partner at Greylock Partners. "This year and next year will be a good time for new companies," he said. "The threat landscape continues to expand. There is a strong shift toward new platforms for technology delivery, such as software-as-a-service. There is some real opportunity out there."
George Hoyem, a partner at In-Q-Tel, said the rapid growth of security threats is bad news for IT security departments, but good news for start-ups that have developed real solutions. Industry statistics show a 571 percent growth in malware since 2006, he noted, and 60 percent of all websites are carrying malware today.
"There's also a real opportunity coming with IPv6," Hoyem observed. "With the rollout of IPv6, everything right down to your toaster will be connected to the Internet."
The venture capitalists offered high praise for companies that are attacking the malware problem through behavioral, service-based technology models, rather than traditional, signature-based software models. The panelists specifically mentioned Dasient and FireEye, both of which fit this mold.
In addition, the panelists said there is a real need for technology that can collect and analyze security data in a fashion that is faster and more intelligent than current monitoring and forensics systems. Silver Tail Systems and Solera, two of the companies they mentioned, and several other companies that focus on "situational awareness" and forensics -- such as Lookingglass Cyber Solutions and SitScape – were among the 20 start-ups selected for the showcase.
For a full list of the 20 emerging security vendors that demonstrated their technologies at the SINET Showcase, click click here.
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