No. of Recommendations: 45
The security market is not that difficult to follow. If you want traditional fire walls and appliances Palo Alto is your company. They are still growing in high 20s, low 30%, something like 40k customers or something (you guys can correct me on that) and billions in deferred revenue.

In the SWG (Secure Web Gateway) market, which is the fastest growing and the most disruptive segment of security there are only three players that matter, and one niche player that is “visionary” and would like to matter (meaning it will probably be bought out) these are: Zs, Cisco, Symantec, and iBoss. All the other players have sales forces, existing customers to sell into and viable products, but they do not really compete well, nor will they ever really compete well in this market against the top 3.

Of these top 3 Symantec is losing its shirt. If you look at the history of Gartner, where Symantec now is, is where BlueCoat was before Symantec bought them. The problem with BlueCoat is that although the technology works great, it is expensive and relies on multiple lines of appliances. That is old school trying to address the new school problem.

If you follow the money you will see that Symantec’s business crashed to the point that the largest shareholder revolted and is calling for a new board of directors and strategy. As you dig deeper into the problem, the problem is almost all based upon the BlueCoat product, which is their SWG product. Their end point security products are performing at least adequately. I made this comment months ago but was challenged that I was reading too much into it. Since then an industry insider came to the same conclusion. Symantec’s BlueCoat business is fallling apart. So Symantec is not likely to be a large player moving forward given its reliance on expensive appliances and the like unless they completely revamp their business, face their innovator’s dilemma, and acquire another company or two or three.

IF you read Okta’s Listing of the fastest growing companies that they see in their numbers of people using their product to log on to a product a funny and very telling thing is found if you know what you are looking for. The #1 fastest growing product Zoom, #2 is Cisco’s Umbrella product (which is their SWG product), #3 is Slack, and #4 (in a virtual statistical tie with Cisco) is Zscaler (all Zscaler is SWG). No other security companies or products in the top 10.

Zscaler is the only cloud only, internet only product and it is completely disruptive. Cisco is doing a great job with its expansion into the security business and leveraging their sales channels and installed base. These two are the only players you need to concern yourself with in the SWG market that is expected to grow into the billions and Zscaler will probably be the largest beneficiary of this market.

An overlooked aspect as well of Zscaler is that Zscaler is the sole security system integrated into 365. You will see a bunch of firms announcing their switch to 365 also going with Zscaler. They often go hand in hand.

*****Data Center HCI market.

There are only two players you need to follow: Nutanix and VMWare. Nutanix has 35% marketshare, VMWare 34%, Dell (that owns VMWare actually sells more servers with Nutanix on it than VMWare by about 2 to 1). All the other players, lead by Cisco at 6.5% and HPE at 5% are also rans. It is a duopoly. Either invest in Nutanix of VMWare. Sure NTAP and EMC (also owned by DELL) have HCI announcements but they are not the same thing as what Nutanix and VMWare are doing.

******Identity market

Follow the money. This is a market where the networking effect plays a big role. If you are a 365 shop, as so many are, Microsoft security is usually the first option you will look at. And many do. But not all, and when they don’t stick with Microsoft they go with OKTA.

If you look at growth rate OKTA is winning this market and the more they win the more they keep winning. There is not really anyone else to be concerned about. Just follow Okta’s numbers from Q to Q.

When you look into the details of these markets, and all the headlines, claims, clutter, etc., investing in these security markets is no more difficult than this.

There are high barriers to entry, the economics are wonderful from a cash flow basis, and a company like Zscaler has multiple years head start on anyone else who may want to enter their market, and Cisco is doing very well in this market (unlike many others it tries to enter) and will also be difficult to move out. We shall have to see where Symantec goes. But it is not a market where someone out of the blue is going to suddenly become material.

Hope this helps. Too much information is as much a problem as too little information. The key is understanding the gist of the information that counts.

Tinker
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