technology and eye

Is Cisco’s eye on FireEye?

Cisco is emerging as a cybersecurity player of note, with the relevant, strategic cybersecurity acquisitions to boot.

Its cybersecurity business is reported to contribute USD748 million in revenue, compared to the overall business’ total revenue of USD12 billion.

But, with acquisitions of cybersecurity vendors like Duo Security and Open DNS already chalking up a total amount of nearly USD3 billion, surely Cisco is ramping up to be a bigger cybersecurity player than it already is. Cisco already posts double digit percentage growth annually, compared to annual growth percentage of  pure-play vendors like Check Point.

Considering the unique area of IT that it provides solutions for; the network from silicon to architecture to even software, surely it also has to increase the breadth and relevance of its cybersecurity portfolio to protect the network end-to-end.

And it has done this over the years, not just with its “Security Everywhere” strategy that sees them bundling security solutions with their networking hardware.

Besides this, Cisco has also executed more buys, some notable ones being SourceFire, ThreatGrid, IronPort, Cognitive Security, Lancope and so on.

According to Nasdaq.com, “Cisco has been deploying the same acquisition strategy for many years… the company buys rather small vendors – relative to its own size – that develop promising technologies.

“It then leverages its huge sales force, portfolio and client base to scale these acquisitions.”

So, with news reports coming around that Cisco may acquire FireEye, many may observe that it’s just Cisco executing their strategy to acquire more technologies, as usual.

However, Nasdaq.com advises caution, stating that this isn’t the first time there is speculation around Cisco acquiring FireEye or some other tech company. Events will remain uncertain till there is official  announcement.

“But before taking any action on such rumours, investors should first check whether the target company corresponds to Cisco’s strategy and portfolio,” the article pointed out.

Nasdaq had rationalised that despite FireEye’s fast growing cloud-based business, it still generates a majority of its revenue (52.6-percent in 2019) from legacy hardware that mostly deal with advanced security threats.

In other words, its legacy hardware is becoming less and less relevant in a business landscape that is slowly but surely shifting their apps and infrastructure to the cloud.

There is also mention of FireEye’s consultancy service, but Nasdaq views this as requiring human resources which can’t scale like cloud-based solutions can. Some of FireEye’s cloud-based security solutions also overlap with Cisco’s, for example endpoint protection and email security.

But, is this the whole picture as to why FireEye isn’t a good fit for Cisco?

Might we be leaving out other factors that would attest to the contrary?

If not FireEye this time, then who else would best complement Cisco’s cybersecurity portfolio, if any?