The Market for Cloud, SaaS Security Solutions Heats Up in the Aftermath of SnapChat and Skype Hacks

On Thursday, January 2, 2014, FireEye announced its acquisition of Mandiant. According to an article authored by Danny Yadron and published on the Wall Street Journal website titled CyberSecurity Deal: FireEye Buying Mandiant for about $1 Billion, the acquirer in this transaction is paying roughly ten times the $100 Million annual revenue Mandiant will book for fiscal 2013 (according to FireEye CEO Dave Dewalt, who is mentioned making this estimate in the Wall Street Journal article).

In a post to this blog published on the same day, I presented my notion about the likely condition of consumer sentiment about Cloud, Software as a Service (SaaS) offers in the wake of a well publicized, successful malicious attack on SnapChat, which occurred over the winter holidays, 2013.

Not noted in my post, but worth a mention, is another successful malicious attack on an online service — this time Skype was the victim — occurring over the same timeframe. My point is the volume of these attacks has achieved a critical mass, where consumers can be expected to lose their appetite for Cloud, SaaS offers for fear of exposure to malicious attack by cyber crooks.

So the transaction makes a lot of sense to me, and, further, provides credible support for my claim. I can only conclude the business segment of Cloud, SaaS consumers, which both of the parties in this transaction serve, is displaying a burning need for a security solution reliable enough to support continued use of these Cloud, SaaS offers. Why else would FireEye pay the high multiple required to close this deal?

Another point needs to be made here. This same business segment of consumers apparently wants to keep using these services, and appears to be willing to pay for security. So the low cost and convenience of Cloud, SaaS offers can safely be said to still represents a benefit consumers are willing to pay to achieve despite a list of successful malicious exploits, which is getting longer, day by day.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved

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