Cybersecurity Vendor Landscape Transforming as Symantec, McAfee Enter New Eras

During the past two decades, the cybersecurity technology landscape has become astoundingly vast, numbering thousands of companies around the world. Throughout that time, two of the companies that have been at the center of that ecosystem have been Symantec and McAfee. This pair of industry bedrocks pioneered and refined many of the security capabilities that remain fundamental today, and their brands have become synonymous with security.

Today, their halcyon days have long faded. After struggling to adapt to change and overcome adversity for more than a decade, both companies are now charting new paths. But the ramifications have triggered seismic shifts in the vendor landscape, signaling what may be the start of the cybersecurity industry's next era.

Despite successful endpoint and identity businesses, Symantec has sought to reinvent itself for most of this century with little success. Its 2005 merger with Veritas seemed to create a cybersecurity software-hardware powerhouse, but the synergies never developed; Symantec divested Veritas a decade later.

Symantec then hoped the acquisitions of web-proxy giant Blue Coat Systems in 2016 and consumer anti-fraud specialist LifeLock just months later would provide an infusion of both technology and revenue. But when Symantec finally seemed to be turning things around, Symantec's brash CEO Greg Clark and his former Blue Coat management team found themselves in a series of scandals, including improper revenue recognition, a subsequent shareholder lawsuit, and alleged unethical executive behavior. In May, Clark stepped down, Symantec had its sixth CEO in 10 years, and key shareholders had had enough.

When Richard Hill, a noted corporate teardown artist, was appointed as Clark's successor, it was only a matter of time before Symantec found new ownership and new direction. Sure enough, just weeks later, Broadcom announced the acquisition of Symantec's enterprise business for $10.7 billion, a deal that was finalized in November. Symantec's products and brand would live on; Symantec the company is no more.

McAfee's Tumultuous Journey
A long-running accounting scandal in the late 2000s stunted McAfee's momentum, and Intel pounced on the opportunity, acquiring the company in 2010 for nearly $7.7 billion. However, Intel's aspirations of integrating the renamed Intel Security unit with its own budding hardware security capabilities never came to fruition, leaving the former McAfee underfunded and losing its competitive edge.

Seven years later, Intel struck a $4.2 billion deal with private equity firms TPG Capital and Thoma Bravo to spin McAfee back out as an independent company. But when it reemerged in 2017, it had a lot of catching up to do. Finally empowered to fix McAfee's ills, CEO Chris Young acted decisively, nixing nearly a dozen non-core products, releasing a slew of new and updated commercial offerings, and refreshing its brand and go-to-market strategy.

Then in 2018, McAfee went all-in on cloud security, acquiring cloud access security broker (CASB) Skyhigh Networks in a deal believed to be in excess of $300 million. Finally, McAfee was positioned as burgeoning leader in increasingly critical areas including cloud security and best-of-breed third-party integration.

But McAfee's private equity owners grew impatient, frustrated by a turnaround perceived to be taking too long and a Skyhigh Networks deal in January 2018 that wasn't delivering enough return on investment. Last month, Young stepped down as CEO, replaced by veteran technology executive Peter Leav, a turnaround specialist whose expertise lies in resuscitating struggling companies like BMC and Polycom and ultimately preparing them for sale.

What's next for these two industry titans? The future remains uncertain, but both seem further and further away from a second renaissance. Symantec, now a division of Broadcom and separate from its now-independent consumer division, NortonLifeLock, had shed, conservatively, 50% of its employees in the past year.

What's Ahead
Broadcom is refocusing Symantec on its core competencies such as endpoint, identity, and data protection, with a bend toward courting Fortune 1000 customers. However, following the newly announced sale of Symantec's managed services business to Accenture, it is unclear if Broadcom is willing to reinvest in Symantec and rebuild trust among customers and partners, or if Broadcom merely intends to squeeze every last drop of revenue out of what's left.

As for McAfee, all options are on the table, including another sale, a long-rumored IPO, or even a merger with a rival such as NortonLifeLock or Sophos. Regardless, like Symantec, more change is coming to McAfee, sooner rather than later.

What does all this mean for the industry? In short, no vendor is safe. In cybersecurity, where the constantly shifting threat landscape fosters a steady stream of innovative technologies and hungry startups to peddle them, the pace of change is only accelerating. For established vendors, there's no such thing as playing it safe anymore.

Meanwhile, a new generation of industry titans is rising, vendors such as CrowdStrike, Fortinet, Palo Alto Networks, and Trend Micro. Their success will be measured not only in customers, revenue, and profits, but also their ability to embrace disruption and harness innovation.

Enterprises must come to grips with the pace of change as well. For example, the era of the five-year and perhaps even the three-year vendor contract may be coming to an end. Enterprises can't afford to risk a long-term commitment to a vendor or provider that may lose its ability to execute and innovate, which is something that can happen increasingly quickly. Ask Symantec and McAfee. Two years ago, both seemed to be primed for a comeback. Their days may not be numbered, but their reversals of fortune are a lesson in how quickly and dramatically the business of cybersecurity can change.

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