SecureWorks

At the risk of offending pretty much everyone, let me tell you a little bit about MiSS Consolidation. She (or could be a he, but the MiSS moniker makes it work) is kind of like some of those ladies from high school that you haven't seen for a long time. Back in the late 90's, she was a babe. The VCs fawned over her and she got invited to all the cool parties and money rained from everywhere. Then she went through her awkward stage. Probably had something to do with a hangover from spending all that money. Some of them moved away, some just disappeared.

But then you decided to go to your high school reunion and you saw her again. She's had a few kids and probably adopted a few. She's large and in charge. She's brutally efficient and given the rate of her eating, there is no telling how big she's going to get. "Built for speed" is how we used to refer to those ladies way back when.

Sufficiently nauseated and offended? Good. I'm in that kind of mood today. But let's get back to the topic at hand. Between the recent IBM/ISS deal and today's SecureWorks/LURHQ deal (info on the deal here), there is no question that MSS providers need to get big or get out. And they need to do it NOW.

The vendor dynamics are pretty straight forward. Stand alone MSS providers are going to get squeezed. The big guys will drive down the costs because they can and there's little outward differentiation. And VARs will increasingly decide to get into the MSS game and cut the lower part of the market out of the mix. So the stand alone guys better get the heft to compete on price and efficiency.

For these reasons, I actually like the SecureWorks/LURHQ deal. First of all, they get to dump probably the worst company name out there (what the hell is a LURHQ?), as the combined entity will be called SecureWorks. But there is also little overlap. SecureWorks plays in the SMB space, mostly financials. LURHQ specializes in larger entities with little verticalization. They've got little overlap on the technical side as well. Each focused on a different aspect of running security networks. SecureWorks on FW and network IPS. LURHQ on SIM and management.

Of course, there is a lot of execution to happen. And we cannot minimize those complexities. They will need to wring some costs out as well. But there is leverage in joining the two models, streamlining operations and moving to a consistent go 2 market model.

And MiSS Consolidation will be back. She's hungry and her appetite cannot be satiated.

SecureWorks is well positioned to be gobbled by someone bigger. They've got enough heft (run rate of about $50 million) and enough customers to make a difference. They will be an attractive target for someone either looking to gain a bigger presence (like VeriSign or Symantec) or get into the MSS business (McAfee or HP). Or maybe even a carrier like AT&T, given SecureWorks already has a relationship with BellSouth and Verizon has the NetSec guys from MCI.

But this won't be the last MSS deal we see. Not by a long shot.