Is social media heading for a fall? Are infosec companies too lazy for our good?
Two questions from the same figures: is social media a financial bubble waiting burst; and are security companies lazy?
The figures come from Rebecca Lipman in The Motley Fool. She points out that Facebook has a healthy operating margin at just under 40%. This is Facebook’s reported operational profit of $1.5 billion divided by its reported revenue of $3.8 billion dollars.
Healthy enough figures, she says, but do they justify a $100 billion company valuation? Particularly when there are many other companies with healthier operating margins but not that valuation.
The implication, unstated but there, is that Facebook could be overvalued. Can it sustain this valuation or is it heading for a fall?
The second question, are security companies lazy, comes from the same figures but is posed by Gunnar Peterson in Firewalls and SSL: More Profitable than Facebook.
He points out that with existing operating margins as healthy as 56.17% for Check Point Software Technologies, and 42.67% for Verisign, there is little market pressure to make them innovate. Why change what ain’t broken?
Sadly the biggest problem in security isn’t attackers or complexity. It’s the lack of market forces in infosec, the buyers (Infosec teams) don’t demand innovation and so the vendors don’t provide it. What you get is a very small toolset for a very high price. Think of what you would have got for a database from Oracle in 1995 (infantile capabilities compared to today) and at what cost, what you would have bought for a database even 7 years ago is freeware at this point, database buyers are discerning and demanding. But 15+ year old innovation is still getting top dollar in infosec.
Interesting. Both questions.