Industrial Automation & Sensors Blog

Dragos Acquisition of NexDefense Puts Pressure On Competitors

by Jared Weiner | 03/22/2019


What Happened?

Dragos, Inc., a provider of industrial cybersecurity software and services, announced on Monday its acquisition of NexDefense, the provider of an asset discovery and identification tool for industrial control system (ICS) networks. Upon announcing this acquisition, Dragos revealed that the NexDefense tool, Integrity, would be packaged with another Dragos tool, CyberLens, and offered free of charge as part of Dragos Community Tools.

VDC’s View

The ICS security market is evolving rapidly. Seemingly not a week passes without a new product launch, partnership announcement, or acquisition. Of note:

  • Claroty and Rockwell Automation announced a global partnership centered on the former’s anomaly detection software (February 2017). Rockwell would later be among those participating in Claroty’s Series B funding, along with Schneider Electric, Siemens, and others (June 2018).

  • Honeywell acquired ICS security supplier Nextnine (June 2017) and later announced the launch of a new security consulting program called CyberVantage Security Consulting Services (October 2018).

  • Forescout Technologies acquired SecurityMatters to extend its ICS security capabilities (November 2018).

  • Nozomi Networks and Schneider Electric announced a global partnership to secure and protect critical infrastructure. (January 2018).

What’s unique about the NexDefense acquisition is Dragos’ immediate release of its newly acquired product within a free-to-use community toolset. This move―though perhaps counterintuitive from a revenue generation perspective―accomplishes a number of objectives for Dragos.

First and foremost, the move puts effective, no-cost tools in the hands of organizations in desperate need of implementing more robust security practices and procedures. Secondly, delivering a free toolset underscores the company’s overarching corporate message as a company dedicated to the well-being of the community as a whole. As explained by Dragos CEO Robert M. Lee in the press release announcing the acquisition: “With the acquisition of NexDefense, we can provide a free asset identification tool specifically for operators looking to start with situational awareness and enable continuous asset monitoring capabilities, thereby helping move our entire community closer to the next level of maturity in security against cyber threats.”

More notable, however, is the not-so-coincidental strategic pressure that the release of Dragos Community Tools puts on its closest competitors, Claroty, Indegy, and Nozomi Networks, which happen to specialize in asset discovery tools. Dragos’ play is a clear demonstration of its belief that asset discovery tools are becoming commoditized, and that its differentiator is its ability to provide superior threat detection and response capabilities as compared to its competitors. Nozomi responded within a day, announcing the launch of Nozomi Network Labs in an effort to bolster its own threat response capabilities and overall threat intelligence expertise. Will Claroty, Indegy, and other competitors pivot as well?

Looking Ahead

The competitive landscape for ICS security solutions will remain volatile. Industrial systems suppliers, IT security giants, and pure-play ICS security suppliers will continue their collective spree of market activity, each in an effort to maximize its share of the rapidly growing commercial market for industrial cybersecurity software and services. Industrial systems suppliers and traditional IT security vendors will undoubtedly explore various acquisitions targets as they seek to build out their respective ICS security portfolios. Could Dragos find itself on the other side of an acquisiton? Or might one of its competitors make a more suitable target?

VDC will explore these topics and more in our upcoming report, The Global Market for Industrial Cybersecurity Software & Services. Please visit our website or contact us for more details!