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Why FireEye’s Transition to a Cloud-Based Model Is Good News

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Increasing competition and lack of funds pushed FireEye toward the cloud

Earlier in this series, we discussed FireEye’s (FEYE) dominant presence in the APT (advanced persistent threat) space. Despite its distinct offerings, FireEye faces robust competition in the cybersecurity space from Cisco (CSCO), Symantec (SYMC), and Palo Alto Networks (PANW).

Symantec’s acquisition of Blue Coat Systems, which is the company’s largest acquisition in a decade, allowed it to become a leading enterprise security player. Cisco has also been on an acquisition spree in 2016.

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FireEye lacks the funds, scale, and footprint that Cisco and Symantec enjoy. A lack of size, scale, and presence could limit the growth potential of FireEye and similar small players in this space. Either these players could be acquired by larger, more dominant players or they could exit the field. Plus, the cybersecurity space could be dominated by fewer players, a trend we have seen in the cloud space.

This scenario could have forced FireEye to launch its new offerings in the cloud space—Cloud MVX and MVX Smart Grid.

Cloud space success for Amazon and Microsoft could boost security players

Increasing demand for email security and advanced email security offerings could indicate a bright growth potential for advanced threat offerings. As we discussed earlier in this series, FireEye is a leading player in the APT space.

FireEye’s email security offerings—EX and ETP—provide protection against cyberattacks by reporting and examining suspicious email attachments and embedded URLs. ETP (Email Threat Prevention) provides antivirus and anti-spam protection in the cloud. FireEye’s email security platform block attacks such as phishing, spear-phishing, ransomware, and malware. It faces stiff competition from Proofpoint (PFPT), which provides email security solutions.

As technology players like Amazon (AMZN) through AWS (Amazon Web Services) and Microsoft (MSFT) via its Office 365 and MS Azure continue to grow in the cloud, they could require enhanced security offerings. This could also drive growth in the APT space.

As a dominant APT player, FireEye could benefit from this growth. However, its success would largely depend on its execution and skill in leveraging its expertise to deliver offerings that meet growing security requirements.

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