Palo Alto Networks PANW recently announced a definitive agreement to acquire the IoT security start-up Zingbox for $75 million. The buyout is expected to close during the first quarter of fiscal 2020, ending October 2019.
The growing number of connected devices among enterprises calls for efficient management and stronger security in their IoT landscape. Currently, IoT focuses mainly on device profiling and inventory, neglecting the need to detect and prevent advanced attacks.
Moreover, in order to bridge this security gap, organizations are forced to use different IoT security products from multiple vendors, making it difficult to manage and look into the security interface, along with appropriating higher costs.
Zingbox’s technology for device and threat identification capabilities will enable Palo Alto to expedite and improve delivery of IoT security to organizations. The combination will allow organizations to enhance visibility and security of their IoT landscape.
Moreover, the acquisition is expected to boost Palo Alto’s Next-Generation Firewall and AI-based security platform — Cortex — by implementing Zingbox's cloud-based service and advanced AI and ML technology into the former’s IoT security offerings.
Palo Alto has been taking various steps to expand its Cortex Architecture capabilities since its inception in February this year. The platform’s APIs were also recently integrated into the acquired assets of Demisto. Its efforts are bearing fruit and attracting large number of notable deals.
Palo Alto Networks, Inc. Price and Consensus
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Scope & Competition in IoT Security Market
Per MarketsandMarkets, the global IoT Security market size is expected to grow to $35.2 billion, at a CAGR of 33.7% during 2018-2023. The firm also notes that the major factors driving growth of the market are the rising number of ransomware attacks on IoT devices across the globe, increasing IoT security regulations and security concerns over critical infrastructures.
In this area, Palo Alto competes with major IoT security vendors like Cisco CSCO, Symantec SYMC, Fortinet FTNT and Mocana, among others. With the bright prospects of the IoT security market, security companies are constantly upping their game.
Early this year, Mocana’s TrustCenter was integrated with the Intel Secure Device Onboard service in an attempt to simplify IoT device security.
Moreover, in September last year, Fortinet launched a new network access control product line, FortiNAC, which delivers network segmentation and automated responses for IoT security.
Palo Alto Leads the Takeover Trend in Security
Another point worth mentioning is the rising consolidation in the security market. Although this leads to fewer competitors for Palo Alto, incumbents like Cisco, FireEye and are honing their competitive skill by pursuing respective acquisitions.
Cisco’s impending integration of Industrial IoT security company Sentryo and FireEye’s acquisition of the cybersecurity vendor Verodin in May this year bears testimony to the spree of takeovers within the security space in recent months.
Notably, last December, VMware acquired Heptio in a bid to better secure the client companies’ journey to the cloud.
However, Palo Alto has been aggressive in this area. Since 2017, the company has spent nearly $1 billion on acquiring several small entities, specializing in the various aspects of security. This year, it has already purchased four firms, including Demisto, Twistlock and PureSec. Management is optimistic about this inorganic growth strategy. The consolidation of Redlock has raked it significant revenues since it was closed last October.
Palo Alto’s belief that its addressable market will be worth $24 billion by 2020 compared with $19 billion in 2017 is encouraging it to move forward in the cybersecurity market. The company’s efforts are leading to consistent expansion of its customer base and revenue growth.
Palo Alto currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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