In an advanced endpoint and server protection consolidation play, Bit9 and Carbon Black announced a merger this morning. Simultaneously, the combined company raised another $38 million in investment capital to fund the integration, pay the bankers, and accelerate their combined product evolution. Given all the excitement over anything either advanced or cyber, this deal makes a lot of sense as Bit9 looks to fill in some holes in its product line, and Carbon Black gains a much broader distribution engine.
But let’s back up a bit. As we have been documenting in our Advanced Endpoint and Server Protection series, threat management has evolved to require assessment, prevention, detection, investigation, and remediation. Bit9’s heritage is in prevention, but they have been building out a much broader platform, including detection and early investigation capabilities, over the past 18 months. But pulling detailed telemetry from endpoints and servers is difficult, so they had a few more years of work to build out and mature their offering. Integrating Carbon Black’s technology gives them a large jump ahead, toward a much broader product offering for dealing with advanced malware.
Carbon Black was a small company, and despite impressive technology they were racing against the clock. With FireEye’s acquisition of Mandiant, endpoint forensic and investigation technology is becoming much more visible in enterprise accounts as FireEye’s sales machine pushes the new toy into existing customers. Without a means to really get into that market, Carbon Black risked losing ground and drowning in the wake of the FireEye juggernaut. Combined with Bit9, at least they have a field presence and a bunch of channel relationships to leverage. So we expect them to do exactly that.
Speaking of FireEye, the minute they decided to buy Mandiant, the die was cast on the strategic nature of their Bit9 partnership. As in, it instantly became not so strategic. Not that the technology overlapped extensively, but clearly FireEye was going to go its own way in terms of endpoint and server protection. So Bit9 made a shrewd move, taking out one of the main competitors to the MIR (now FireEye HX) product. With the CB technology Bit9 can tell a bigger, broader story than FireEye about prevention and detection on devices for a while.
We also like the approach of bundling both the Bit9 and Carbon Black technologies for one price per protected endpoint or server. This way they remove any disincentive to protect devices across their entire lifecycle. They may be leaving some money on the table, but all their competitors require multiple products (with multiple license fees) to provide comparably broad protection. Bundling makes it much easier to tell a differentiated story.
We got one question about whether Bit9 is now positioned to go after the big endpoint protection market. Many security companies have dancing fairies in their eyes, thinking of the multiple billions companies spend on endpoint protection that doesn’t work. Few outfits have been able to break the inertia of the big EPP vendors, to build a business on alternative technology. But it will happen at some point. Bit9 now has most of the pieces and could OEM the others pretty cheaply, because it’s not like an AV signature engine or FDE product is novel today. It is too early to tell whether they will go down that path – to be candid they have a lot of runway to sell protection for critical devices, and follow that with detection/investigation capabilities across the enterprise.
In a nutshell we are positive on this deal. Of course there are always pesky details to true technical integration and building a consistent and integrated user experience. But Bit9 + CB has a bunch of the pieces we believe are central to advanced endpoint and server protection. Given FireEye’s momentum, it is just a matter of time before one of the bigger network players takes Bit9 out to broaden their own protection to embrace endpoints and servers.