January 2nd, 2009

Military contractor "cyber-defense" gold rush begins

Posted by Adam O'Donnell @ 11:38 am

Categories: Governments, Punditocracy, United States of America

Tags: Information Security, Lockheed Martin Corp., Boeing Co., Security, Adam O'Donnell

Sensing a shift in upcoming defense priorities, Lockheed and Boeing are both launching information security product divisions.

Bloomberg is reporting that both Lockheed Martin and Boeing are building security product groups to address the military’s needs in defending cyberspace. I doubt that the military requires technology to “defend cyberspace” that is fundamentally different technology than what is available on the commercial market right now. What I do think is interesting is what Lockheed and Boeing will be required to do to scale those operations quickly, and we need to think about what this means for the security industry as a whole.

Let’s put our MBA hats on for a second. Both Lockheed and Boeing know that building a product group from scratch is a challenge, and they both are going to be going through the “Build versus Buy” equation as we speak. They will be looking at small time vendors that could make up the standard components of a security company, giving special consideration to any organization that generates a significant amount of revenue from the government and military already. If the two organizations begin making acquisitions, this would free up capital that has been allocated to a few of the late stage security startups that have been sitting in the market for some time.

If both of these contractors are serious about getting into the information security business, their entry in the market could clear out some of the mature security startups and make room for some new ideas and new technologies. This is good news for any of you who are cooking a security product on the back burner and are looking for startup capital in the coming year.