Cybersecurity buzz could be a bubble

But probably not for a while

Is the current interest in cybersecurity only a passing fad, a bubble that, like the housing market, will burst?

Some experts think so. In a Washington Post article, Roger Novak, co-founder of a venture capital firm called Novak Biddle Venture Partners, said the proliferation of small and start-up companies seeking funding for cybersecurity products and services bears similarities to the dot-com bubble of the late 1990s and early 2000s.

"A lot of the early people made significant money, but there were a lot of 'me too' companies," he said in the Post article. "So a lot of people in the investment community probably absorbed losses in the space and began to move on."

For now, fueled in part by federal government needs, the market for cybersecurity firms is strong, the Post reported. "With the National Security Agency, the soon-to-be-relocated Defense Information Systems Agency and the newly-founded U.S. Cyber Command at Fort Meade; the Department of Homeland Security set to move to Anacostia; and the Pentagon just across the river, a region known for information technology is fast becoming a cybersecurity capital," wrote article authors Marjorie Censer and Tom Temin.

Web aggregator Slashdot linked to the article and collected some interesting comments. One Slashdot commenter, posting under the name "Glass Goldfish," said bursting bubbles are not as bad in labor-intensive fields.

"It will suck when people get laid off, but you're not buying a huge quantity of equipment that you have to sell at rock-bottom prices. Or entire streets of homes which won't sell even if they are heavily discounted," the commenter wrote. "You're probably ensuring that software is properly patched, hardware is not using default passwords and maybe some penetration testing. Apart from office furniture/computers, I don't see a great deal of capital investment. There may be investment in equipment, but that'll be for the client (government) to buy and maintain.

"Hopefully it'll create some work for people who desperately need it."

About the Author

Technology journalist Michael Hardy is a former FCW editor.

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