Security Resellers Not Left Out Of Recent Consolidation Wave

It's not just the products and the vendors. Security VARs, systems integrators, consultants and solution providers are also poised to undergo a wave of consolidation as the security industry contracts into fewer and better-equipped players.

Pravin Jain, CEO of cMango, a Sunnyvale, Calif.-based VAR, said his company was recently approached by a VAR in the market for cMango's professional services expertise and client roster. Jain said he's heard word of more and more of his fellow solution providers being courted by their larger counterparts than ever before.

"Resellers see the opportunity to expand, particularly in the area of service revenue, and they can do it faster by buying someone than growing organically," said Jain. Driving consolidation at the reseller level is the increasing awareness of the advantage of adding security at the front end of an IT deployment, not as an afterthought. This mind-set stems directly from the fact that security is becoming part of the network infrastructure itself, not just a defense put in place around the network, according to Edison Peres, vice president of advanced and core technologies for worldwide channels at Cisco Systems, San Jose, Calif.

The shift to network-based security makes VARs with in-house networking expertise the more likely buyers of small, boutique security shops, said Peres.

"The networking guys are bigger by definition and they're going to be adding more security capabilities. We're seeing that now as we're working with our partners to develop security practices—that they're out there looking for capabilities and they're obviously buying it in some cases vs. home-growing it," said Peres.

Large integrators that cater to vertical markets are also in the hunt to acquire small security resellers that can expand their business, said Lee Travis, chairman and CEO of Home Technologies, a residential systems integrator in Bellevue, Wash. Travis has encountered many small, specialty home security resellers that are actually eager to be bought.

"I believe our industry is starting to enter a consolidation period and will emerge with a limited number of dealers, but dealers who are much larger in scale," said Travis.

Not all security resellers agree that their numbers are about to contract.

Jeff Jamieson, vice president of sales and marketing at Whitlock Infrastructure Solutions, based in South Riding, Va., thinks the economic downturn of the past few years has been so fierce that many smaller VARs that would have made prime acquisition targets have already exited.

"The smaller players were hit hard," said Jamieson. But Peres thinks the move to network-based security is too big a paradigm shift for security VAR consolidation not to occur.

JENNIFER HAGENDORF FOLLETT contributed to this story.