According to a recent market research report from Gartner, 44 percent of the $16.5 billion worldwide security software market in 2010 belonged to the five largest vendors, including Symantec, McAfee, Trend Micro, IBM and EMC’s RSA.
The combined market share for the top five vendors has dropped from 60 percent since 2006, according to Gartner’s report, “Market Trends: An Ever-Consolidating Security Market Never Consolidated”.
Gartner said that while M&A activity been a constant factor, the market is far from reaching a consolidated status, i.e. in which more than 60-70 percent of the market is owned by the top five vendors. Currently, any consolidation at the top is contrasted by an expansion of the market at the bottom.
According to Gartner analysts, the main reason for this trend is that established leaders are losing market share to smaller players, many of which were start-ups that developed new offerings to meet newly introduced threats and vulnerabilities, or implemented a successful go-to-market strategy, built themselves a niche presence and gradually took market share away from incumbent vendors. Similar to other related markets, such as the IT operations management market, security relies a great deal on innovation from start-up companies, which is particularly the case with a continuous influx of new vulnerabilities and threats.
“The information security market is in a continuous state of consolidation, but even fairly intense merger and acquisition (M&A) activity has not stopped the market from being very fragmented,” said Ruggero Contu, principal research analyst at Gartner. “Market expansion and innovation are driven partly as a result of new start-up players entering the market. New players bring innovative technology solutions to cater for end-user requirements that in turn are created as a result of the new threats, often introduced by cybercriminals taking advantage of new vulnerabilities created by changes to IT ecosystems.”
“We expect more consolidation to take place, along with innovations being introduced by new additions to the market,” said Mr. Contu. “The security market continues to provide good growth opportunities for both established players and start-up companies, and the market landscape remains fairly dynamic with many competitors. While end-user organizations have shown an increasing preference to use a suite of products from fewer suppliers, the complexity of end users’ product portfolios will not be solved in the short term because new, stand-alone niche tools will continue to be purchased to solve new rising threats and vulnerabilities that incumbent players haven’t been able to address.”