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Bye-Bye Independent Managed Security Providers

BT bought Managed Security Services Provider (MSSP) Counterpane this week for "tens of millions of dollars," according to Chuck Pol, president of BT Americas.
Counterpane was the last of the independent MSSPs, capping several years of consolidation in the security outsourcing market. Symantec was the first, snapping up RipTech in 2002. Since then other MSSPs were gobbled by bigger companies (VeriSign/Guardent; Verizon/NetSec ) or have banded together (Ubizen, TruSecure and BeTrusted partnered to form Cybertrust; SecureWorks and LURQH joined as SecureWorks).

This August, IBM bought ISS (both its product line and MSSP) for $1.4 billion, a price tag several orders of magnitude greater than the Counterpane purchase. Granted, Counterpane doesn't have a product arm, but "tens of millions" seems like a song compared to IBM's payout.

The consolidation isn't surprising. MSSPs are capital-intensive. They require multiple Security Operations Centers, 24/7 analysts, lots of fat pipes, and a strong investment in software engineering to analyze and correlate the reams of data they deal with. Having a rich parent company helps with the bills and reassures potential customers that the provider won't go belly up.

BT says the purchase is part of a strategy to grow its security services practice. Counterpane will have access to BT's client list, and BT plans to expand the MSSP to serve the European and Asian markets. Founder Bruce Schneier will remain as CTO.