The software industry is fluid and unforgiving – especially the CyberSecurity space. Companies either innovate or fall behind. There is no such thing as standing still.
This week semiconductor firm Broadcom (tkr: AVGO) agreed to acquire Symantec’s Enterprise business. Symantec (tkr: SYMC), is a CyberSecurity software vendor and is a laggard in an industry that’s as fluid as any. Broadcom is about to learn the lesson that investment is required to maintain market share in the CyberSecurity vertical. Squeezing operations for every last drop of EBITDA margin (north of 50%: $1.3B of EBITDA on approximately $2B of revenue), is a recipe for losing share in a vertical where the latest solutions incorporate machine learning and related AI technologies for threat detection and resolution.
Anyone who works on AI/Machine Learning-related initiatives will tell you it is a people intensive effort (data labeling, model training). One that requires consistent investment and refinement over time. Below are a couple of related podcast episodes to the transaction.