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i Richard steeped in here I'm chief research analyst for IT harvest and i'm going to give you my presentation that i'm making at the RSA security conference 2016 IT security industry real trends before we dive into some of the data that i finally pulled together after many years i want to address two factors and two misconceptions about our industry and first off is that there is no IT security industry consolidation for some reason you cannot see an article published on some new acquisition or M&A activity in the IT security space without the journalists throwing in there the fact that this is a further sign of industry consolidation this has been going on for as long as I've been in the industry 25 years there's constant M&A activity in IT security and yet the number of total vendors is growing all the time mature industry is consolidate so you've got hotels the chains all get together auto industry consent through consolidation phase storage went through a consolidation phase the security industry won't consolidate until the threat actors go home the other thing I want to point out is that growth in IT security is seriously misstated by most of the firm's attract the industry you can't grow from a two and half billion dollar industry in 2003 where most of the firm's pegged it to an 85 billion dollar industry in 2013 at the nine percent compound annual growth rate that most firms have talked about over over the last decade or more that's a thirty-four percent compound annual growth rate even a 2015 Gartner came out and said that there was a that the cyber security industry was going to grow at four point seven percent the reality is much much different it's much much greater the industry is growing today at about twenty four percent I believe it will continue to grow at twenty four percent over the next decade what does that look like and one of the drivers for that keep in mind that IT security is the only technology industry that has an outside driver most technologies are driven by innovation reduce costs faster speeds and more features so everyone in that industry is constantly struggling to to reduce the costs make their things go faster and to add features so there's competitive growth there's innovation going on but they don't have what cybersecurity has and that's the threat actor they are driving the need for security spending without the threat actors we wouldn't need all of this security spending if you looked at that 2003 time frame when the industry was only two and half billion dollars that was money spent on basically firewalls IDs and antivirus and there's all to stop hacking activity from people just were breaking into things because they could because you were vulnerable they did and then we saw the rise of cybercrime and all of a sudden the industry kind of pivot in the threat actor industry pivoted into taking advantage of those vulnerable systems in order to steal banking credentials and steal money from your bank account or credit card and then they expanded into you know fraud that we see going on Nigerian 419 scam artists all the rest was pretty much what was going on in the first years of of the century and then we started to see nation-states get engaged so the actual you know first apt style attack was seen by Lockheed Martin in 2003 it was part of a series of attacks that the FBI dubbed Titan rain and you know that just saw all the growth you know that we've experienced up till now remember the famous apt one report advanced persistent threat the mandiant put out only three years ago that was just a you know the level of sophistication in these types of nation-state attacks and you know also in the last several years we've seen you know attacks against countries from one from one country to another Russia against estonia Russia against Georgia Iran at least hackers against Saudi or Saudi Arabia and the United States so as these nation state level events grow so so does the security spending but the big change on the reason that led me to my predictions of future growth at at similar rates was a discovery by most of us thanks to Edward Snowden that we actually had an adversary that was much better financed than anything we had ever conceived her before and that was the intelligence community's of various countries particularly the United States England Australia and Canada who are systematically taking advantage of a intelligence windfall because you know most people weren't encrypting data most organizations were encrypting data as mattified Google and Yahoo are encrypting their data centers or the traffic that flowed between them and the intelligence community was tapping into that basically stealing a lot of data and of course predictably and certainly as I predicted the industry is responding we've got technology they can counter even this threat I believe and then involves spending a lot more on encryption as you know Yahoo Microsoft Google have worked in the last three years to encrypt their entire cloud infrastructure all their data stores and all the communications between them of course encryption is relatively inexpensive to deploy we can do that the hard part with encryption as always is key management generating keys and revoking keys and storing them in a safe place and it's at storage that is going to be the driving that's that protecting your encryption keys is going to drive security industry growth because of course in the intelligence community these spy agencies have decades of experience cracking encryption and trying to get at you know the communications and the signals intelligence that they're after and invariably they don't do that by breaking the encryption but they do that by stealing the keys so in order to protect those keys we're going to have to spend on all of the things that IT security is has been doing forever and that includes firewalls and Nepal and network security Identity and Access Management strong two-factor authentication the data encryption all the recipe that goes into protecting those keys as the spending that is going to be required going forward so twenty-four percent annual growth rate compounds pretty quickly too by 2023 I'm predicting six hundred forty billion dollars in global annual spending on security huge numbers in the meantime the number of vendors is growing it's it's a full-time task another part of myself my team to keep up on all those vendors we learn of new ones every single day at this point in time we take 1325 vendors broken down into about 80 categories we've seen security vendors in 35 countries and here in the United States in 37 states so let's just quickly take a look at that at that data just to demonstrate because of the question on Twitter that I actually have that data please feel free to go to IT harvest where i'll be publishing this in the various report formats and here it's the actual spreadsheet so 1300 benders broke them down here sort of them on the major buckets you know which are network I am governance risk and compliance and endpoint security plus a lot of smaller buckets a lot a lot of and I'm scrolling through them here this is probably the one of the few ways i can actually expose the entire database without saving somebody the months of effort it took for us to put this together so this is my IP that I'm finding extremely valuable just since we finally pulled it all together so back to the presentation 1325 vendors how do they break down by country well the u.s. that surprisingly is the dominant country for IT security 856 security vendors in the United States alone Israel is a far seconds of almost a quarter of that number with 114 I'm sorry almost an eighth of that number with 114 UK after them with 82 and then you got Candida with 48 and then you've got European countries Germany and France 33 and 25 you even India which is actually getting a growing number of security vendors pretty quickly now I expect this grant fatten out a lil in its tail and that you know post-snowden there's movement to for each country to have its own IT security vendors it's not quite a logical thing but if you're in Germany and you feel like you can't trust a firewall vendor from the United States because you suspect that the NSA and secret agreements with them to put back doors why then you have your own firewall vendor now of course now you have to worry about your own country intelligence services putting backdoors into those pieces of equipment as well but Dina's say I believe there'll be more IT security vendors as we see some of this fractal ization of the market occurring so let's drill down into the United States where we break it down by number of vendors / state California has 328 security vendors it's almost twenty-five percent of all the vendors in the world are actually in California vast majority of them in the Bay Area the other concentration is around San Diego followed by the washington DC region with 91 vendors so that's Maryland and Virginia and DC proper followed by the Boston area with 69 vendors and then Texas with 52 and then in the chart I filled out you know some of the other ones New York Florida Georgia surprisingly with only 27 vendors in it and yet you'll see news reports coming out of Georgia that they actually have a hundred fifteen vendors I've dug into it I can't find that many in Georgia maybe historically there been more vendors but a lot of them have been acquired from my ice is s2 Lancope and are technically in Georgia companies anymore I'm gonna get all the way down to Michigan with 18 IT security vendors I'd actually surprised me you know I've been in Michigan over 35 years I didn't realize we had that many vendors let's go talk to them and who can resist if you've got all the data in a database sorting it by first letter and certainly as we were doing our research we recognize that there sure were a lot of s's we we hated every time we had to get to the s's to fill out our data with 172 companies under the s's undersea 154 companies that's a new development because of all the cyber companies that have started up in the last three or four years the little blip under eye is because of all the identity vendors that also accounts for the A's to where you have all the authorization and authentication vendor showing up so 22 companies with cyber in their name I'm sure most of them created in the last five years or less and then how does this break found by types of vendors and market size so my market size numbers are estimates based on the current hundred five billion industry that I pegged the the entire global market for security products at we've got the largest bucket is network security vendors 230 of them and twenty nine billion dollars and then you've got the I am Identity and Access Management vendors 211 of them smaller market about half the size of network security but there's so many vendors in that space because of all the authentication techniques I you know you've got dozens of vendors at do various biometrics be they voice or gate or fingerprints or the way you type on your keyboard all those biometric types of vendors are there as well as all the password management solutions so that gives you quite a lot of vendors endpoint which is the second biggest buckets at just under 21 billion only has 134 vendors in it but you have to realize that there's some very large vendors in there because that's where semantic Intel with their Mac Mac the acquisition Trend Micro even sophos it and of course Kaspersky whose private but PI does a billion a year in revenue so you've got maybe six or eight extremely large vendors in that space plus you know another dozen that are doing over 100 million a year and the regional endpoint security antivirus companies and then tons and tons of startups who are trying to you know just fix this problem that signature bass antivirus apparently isn't addressing and I gotta ask you if the industry is consolidating then why are there 130 for endpoint security vendors you think maybe there's room for four or five in a mature industry and that's just because the industry's temperature thread actors are pushing us further and further and we need better and better technology data security is the bucket for all the encryption and pki products 169 vendors in that the reason there's so many vendors is because of all the startups in secure private communications so all of your secure messaging apps your secure videos secure voice you know all of that falls into that fifteen point seven billion dollar bucket and then the smallest bucket is governance risk and compliance hundred ninety vendors in that and the reason even that there are so many vendors is I throw in most of the log management sim vendors qualifying my mind is more compliance vendors and security vendors as well as a vulnerability management vendor so very mature industry it's been around forever but it fits into GRC so if all the things I've been saying here are true how will you change your plans for 2016 and beyond knowing that the number of vendors is increasing global spending is increasing at twenty-four percent what are you doing with your own budgets your own hiring plans your own training plans how are you going to accommodate growth inside your IT security team of twenty four percent a year most organizations you know if anything spend you know five to seven percent of their total IT budget so I got it that's going to have to increase its going to have to increase to twelve percent or more and a lot of that maybe fold it into the deployment of new projects and new products because you're going to be spending money on software assurance and authentication and encryption so that that spending will be part of that the security industry is going to be 640 billion dollars just seven years from now how is that going to change your investment focus you know maybe you want to put some of your 401 K to secure companies because they're doing very well right now and bound to do extremely well over the next decade and what about security conferences or they're going to be twenty four percent more security conferences are the ones we have just going to grow bigger and for that matter zarse couldn't quickly outgrow all of the facilities that Moscone can provide and have to find a new home in not too many years