Big Blue, HP, Digging Deep / Make My Scary Competitors Go To Sleep

Thomas Ptacek | August 31st, 2006 | Filed Under: Uncategorized

I don’t have a lot of time to blog this week (it’s the start of the school year, my daughter just started kindergarten, and I have client obligations). But I want to respond really quickly to the armchair quarterbacking on ISS, and, now, the “impending HP hurricane”.

Let me tell you how a small indie security player like Matasano evaluates a takeover like IBM/ISS: Please, sir, can we have some more?

On the chessboard of the security industry, companies like ISS and Checkpoint are the knights. They’re ambitious, egotistical, and capable of inflicting damage. But they’re also somewhat unpredictable and, when you get to trading down pieces, not worth all that much. If I’m a small product company with customer traction, ISS can mess up my product plans, but they probably can’t buy me.

Any time a company like that is euthanized by a giant like IBM, a little light flickers on in my cold, slimy heart. I tend to believe it will make IBM more acquisitive, which adds fuel to the fire in the indie market. I tend to believe it will make the A-players at ISS fat, happy, and gone in 12 months.

We like it viable competitors who aren’t viable exits go away. Are we crazy?

I don’t think HP’s going to make a move, though; don’t they have their hands full trying to exploit the tailspin Dell is in now?

[Update 9/1: Mike Rothman notes “of course ISS or Cisco could buy Matasano”. Two responses. (1) I didn’t suggest that ISS couldn’t buy us. Chris or Tom, if you’re interested, we can be reached at blog@matasano.com. (2) Cisco and ISS are two very different players. If ISS is a knight, Cisco is a queen (that was fun to say).

Viewing 5 Comments

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    HP and IBM are fundamentally different companies, even if they are still in the same markets. IBM today is a solutions and services company. HP is still hardware focused regardless of what they claim. My armchair quarterback prediction is that HP will partner rather than buy.
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    I agree with Josh. It's clear that IBM is uninterested in selling Proventia licenses, but very interested in getting a name brand MSSP offering for the Global Services division to leverage.

    Speaking as someone who used to go head-to-head with GS for VAR/imp work, any time there was a significant security component to a project, they usually lost the business even to nobodies like me. They need this to round out a division that is flailing. Don't be surprised by another services/consulting buy in a different sector as IBM tries to patch the leaks.

    Here's where I disagree with Josh - I predict HP does nothing in this sector in '07.
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    Does anybody believe IBM is going to keep any of the talent at ISS after the takeover?

    I'm not just talking about the X-Force rock stars. I don't think ISS will keep their best client-facing people either.

    It will be interesting to compare what happens here to what happened at @stake. I wonder which regional office is going to peel off and turn into a consultancy first?

    If you were a (soon-to-be-ex)ISS-er, what would YOU do? Stay? How much would they have to pay you? Look how ISSX has been doing in the last 3 years. How many of their A-players are really handcuffed?
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    Frankly, I doubt IBM cares. They want the MSSP pracitce, not the vuln-dev & research guys. Most of the rock stars at X-Force are focused on research and P&P development and less on directly billable work.

    Combine that with what happened with Mike Lynn and the signal that sent, and I suspect that an exodus is imminent. They'll look for greener pastures, and with a small number of exceptions, IBM won't fight to keep them.

    Of course, I'm generalizing here, but I think it'll be obvious.

    So the $64 question is - speaking of parallels between IBM-ISS and Symantec-@stake, is Matasano going bring on anybody from X-Force as this happens? :o)
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    I totally agree with Josh, HP & IBM are entirely different companies.

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