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Market trends – Big players snap up security companies as sector shows signs of maturity

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As 2006 draws to a close, the information security industry is changing, following a number of high-profile acquisitions and strategic alliances.

What's behind all this activity, and is it the whole picture?

A man who knows more than most is Jay Chaudhry, Secure Computing's chiefstrategy officer. Secure Computing swallowed Chaudhry's previouscompany, CipherTrust, in a $273 million (£146 million) dealearlier this year.

"It's all down to market maturity," he says. "Those security marketsegments that are becoming mature will be gobbled up. Mergers andacquisitions mean there will be fewer but deeper relationships with manycustomers."

But, according to Chaudhry, there are still 800 security companiesoperating in North America. Clearly, they won't all survive, but venturecapitalists' continuing love affair with IT security means that there'sno shortage of well-funded start-ups.

Chaudhry predicts we will have three types of infosec outfits in thefuture: big companies with security as a sideline - IBM, EMC, Cisco etal; independent security-focused companies such as Secure Computing andCheck Point; and start-ups.

"New threats and emerging technology such as VoIP mean there will be noshortage of innovative start-ups driving new security solutions," hesays.

Chaudhry believes that the distribution of new businesses will stayfocused in the US.

The prognosis for Europe is bleak, with only South Korea and Israeltipped as centres of innovation in IT security to rival the UnitedStates. "Russia has some expertise in anti-virus technology," heconcedes.

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Keep up to date with developments online at www.scmagazine.com/uk/news/

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