Re: Concerns with NFR

From: Greg Shipley (gshipley@neohapsis.com)
Date: 06/24/02 

Date: Mon, 24 Jun 2002 16:39:18 -0500 (CDT)
From: Greg Shipley <gshipley@neohapsis.com>
To: Samuel Cure <scure@redbulltech.com>

On Fri, 21 Jun 2002, Samuel Cure wrote:

> There is a rumor floating around that they are having financial
> bankruptcy problems and I usually do not trust rumors, but with a
> private company that does not disclose its financial status, it is hard
> to tell. Does anyone know if this is even remotely possible?

First off, it's good to hear that people are investigating the back-end
financials of companies, and not just the technology. Financial viability
is something that our industry, IMHO, sort of forgot about in the late
90s, and it has certainly come back to bite us. (ISPs that went bye-bye,
anyone? .COMs? CLECs? Yeah....)

However, one has to be really careful with commenting on these types of
issues, especially in public forums, without really solid facts. It's
pretty easy to walk right into a business slander suit if one isn't
careful, and financial analysis is a field onto itself.

So cutting to the chase, if you look at the NIDS space, you have a few
publicly traded companies on the market - companies like:

- Cisco (CSCO)
- Enterasys (ETS)
- ISS (ISSX)
- Intrusion (INTZ)
- TippingPoint (TPTI - how's that for odd? Public startup, sorta...)

...and then you've got private companies like:

- NFR
- Recourse
- Lancope
- Intruvert
- OneSecure
- ...the list goes on....

[Note: neither of these lists are complete - examples only]

So with the publicly traded companies, at least you can see how they are
doing, financially. (finance.yahoo.com works wonders) With the private
ones, they are usually in one of a few states: not-profitable and still
burning VC, not-profitable and burning cash reserves (almost the same
thing), break-even, or profitable. Profitable is obviously preferred, but
even some (most!) of those publicly traded companies are not profitable
right now. But I am a far cry from a financial analyst, and I'm
digressing, so I'll shutup before I get into trouble...

Back to your question about NFR - I'd look at the technology, see if it is
a fit for your existing customers and target customers, and do as much due
diligence on the financial/biz side as possible. But I would also
suggest that one performs both a financial viability AND technology review
of any product/partnership - you really need to look at both areas.

> With too many IDS companies to choose from, I believe this market is
> going to consolidate and many of these players won't be around tomorrow.
> I'm trying to be picky in my selecting of IDS technology. If there is
> other IDS technologies that people would highly recommend, please let me
> know.

I have issues with the way IDC reports their IDS estimates (hardware vs.
software NIDS? Ergh...silly, IMNSHO), but the last time I saw their
reports quoted they were claiming something like the 2002 IDS market being
between $400mil and $500mil. How many NIDS vendors alone are there? I
know I'm tracking at least 12, and Andy (talisker) tracks way more then I
do. Can I $500mil market, if that, support that many players?

Yeah, I don't see them all sticking around in their current form. The
next 12-24 months will be interesting, that's for sure.

-Greg

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