The Cloud Is Creating Head Winds For Security Appliance Vendors
The Cloud Is Creating Head Winds For Security Appliance Vendors
As the market for cloud based services heats up every vendor of traditional security products is struggling with its cloud strategy. Network security appliance vendors face particular challenges.
Symantec's newly appointed interim CEO, Rick Hill, acknowledged this trend in his May 9 earnings call for the 4th quarter, 2019. In addition to the general malaise of sales across all of Symantec’s business lines he had this to say:
The ProxySG business, which is the Blue Coat hardware Proxy bundle, has fallen off quicker than we anticipated, and as a result, we've not experienced as large a refresh cycle as we expected. The cause is clear. The move to the cloud was much quicker than thought. We were behind with our product offering…
In other words, Symantec’s security appliance business, which they acquired for $4.65 billion in 2016, is continuing to show signs of weakness and the reason given is faster adoption of cloud services.
Symantec has a wide portfolio of products in its enterprise and consumer divisions, but they are primarily in the endpoint protection business, which has its own challenges. Endpoint protection solutions have to demonstrate better efficacy and value in the face of good-enough anti-malware from Microsoft bundled with Windows10.
Proxy appliances provide protection by terminating network connections and applying filters to protect web traffic. Content URL filtering (to control where employees can go on the internet) is a must-have feature and Blue Coat was already losing market share to the other security appliance vendors such as Fortinet and Palo Alto Networks that simply bundled that feature into their UTM or Next-Gen Firewall appliances.
In a cloud world, applications are delivered from the cloud to users who could be anywhere and on any device. They are not on the corporate network. An expensive security hardware stack in the data center is not even positioned to provide protection. It should be no surprise at all that Symantec is experiencing this shift and it is impacting their revenue.
Many organizations have tried and failed to morph their software solutions to the cloud. Compare the rapid growth of cloud delivered applications like Salesforce, Workday, and Okta, to those of the once dominant leaders like Siebel, Peoplesoft, and Netegrity (acquired by CA in 2004) despite efforts to maintain relevant.
The reality is that established legacy vendors with large install bases will survive but they will struggle to hold on to market share. They will not ward off the rise of companies with products which are “born in the cloud.” These products take advantage of the reliability, easy deployment, and elastic architecture of the cloud to create multi-tenant solutions that can scale quickly and gain market share at a lower Total Cost of Ownership.
Look to cloud-first solutions to challenge legacy on-prem software and hardware solutions.
Microsoft is the rare example of a tech vendor that has successfully moved products to the cloud, most notably Exchange to Office 365. Its customers have reaped the benefits of moving to a scaleable infrastructure with frequent feature enhancements, reachable from anywhere on any device.
What are the challenges for security appliance vendors?
Network security gear is designed to handle millions of packets a second. In the corporate data center throughput and low latency are king, so these boxes have specialized silicon to handle the loads. Individual appliances can cost hundreds of thousands of dollars in the data center. All corporate traffic is consolidated from locations around the world and filtered through these appliances.
The cloud is replacing the corporate data center while the internet is replacing the corporate network. In an effort to stay relevant in this new world, security appliance vendors strip out the hardware acceleration they invested so much in and virtualize their software so it can be deployed in a VM in the cloud. These are single tenant solutions. Each customer deploys their own copy of the application. They still have to update each instance and maintain complicated security policies based on IP addresses.
The acknowledgement by Symantec that the move to the cloud is hurting its security appliance business is just the beginning as a twenty five year old industry enters a phase of upheaval.
Richard Stiennon, industry analyst, covers the IT security industry. His just launched book is Secure Cloud Transformation: The CIO's Journey. Follow him on Twitter @cyberwar
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