There is absolutely no question that large organizations are growing more and more concerned about data privacy and security. In fact, a recent ESG Research survey reveals that security professionals rate "protecting confidential/private data" as the biggest influence on their security management needs--more important than regulatory compliance or corporate governance. The survey was based on a recently released Enterprise Strategy Group report titled "Security Management Matures," which I co-authored.
Obviously, product demand should be healthy but suppliers may be facing a tougher market because of growing consolidation in the data loss prevention market. The market is no longer a quiet playground for start-ups--EMC/RSA bought Tablus, McAfee grabbed Onigma, and Trend Micro just purchased Provilla last week. Cisco is also in the fray with products it got by way of IronPort.
The buying isn't over--yet. Check Point and Symantec will probably open their checkbooks while other network, messaging, and endpoint security vendors may be window shopping as well. These vendors will find a few good companies to choose from. Orchestria is new to data loss prevention but has deep roots in regulatory compliance. Reconnex supplements data loss prevention with good tools for intellectual property discovery and policy management, and Vericept has a good installed base and strong data classification algorithms. All of these guys have the right blend of technology and installed base to command a reasonable value.
Ironically, the odd man out may be data loss prevention market leader Vontu. Rumor has it that the company has turned down a few offers already. I've also heard that Vontu responded to these proposals with extraordinarily high counter offers that stopped all further negotiations in their tracks.
Vontu didn't establish its leadership position by accident; the company has done a great job of developing enterprise-class products and executing at the point of sales. It also did a wonderful job getting its products implemented all over Wall Street. Nevertheless, the Vontu board may be playing a high-stakes game of chicken, betting that one of the bigger vendors will blink and decide to pay a huge premium for the market leader rather than buy data loss prevention technology and use existing resources for engineering, marketing, and sales like EMC/RSA, McAfee, and Trend Micro did.
Who knows? This gamble may pay off and Vontu will have the last laugh. Then again, how many times have we all seen products turn into features and tech leaders fade into the sunset?