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> They just didn't have the strength to make that move, for whatever reason. The reason is well known: BMW has been too focused on sustaining innovations exten

> They just didn't have the strength to make that move, for whatever reason. The reason is well known: BMW has been too focused on sustaining innovations extending their current strengths than disruptive innovation that will eventually displace them -- classic Clayton Christensen: Christensen, Clayton M. The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail. Boston, MA: Harvard Business School Press, 1997. http://claytonchristensen.com/key-concepts/ http://claytonchristensen.com/key-concepts/

windexh8er 7y ago
Exactly this. It seems to be a natural cycle in most industries where there comes out a viable disrupter. Newcomer comes in to lead the pack in a differentiated part of a given market. They lead for years and displace their existing counterparts who fail to pivot for the sake of short term profit. "How can we risk X number of quarters or even years to sink profits back into R&D to become better and compete for years to come? What about next quarter?". The message is always the same from the incumbent side: they claim they're not concerned as new tech is a niche, then they realize the miss and spread FUD, and then they half ass enter to see if anyone's paying attention but the product still isn't near their competitor. I saw this first hand in the firewall market starting back in 2012ish. Palo Alto Networks came to the plate with a fundamental shift. "Safely enable applications" was one of their original selling tactics. This went against other firewalls that were playing whack-a-mole with ports and IPs, where PAN was focusing on applications (App-ID). The founder, Nir Zuk, even made fun of his competitors (he had a very public rivalry with Gil Shwed, CEO of Checkpoint) by using "Innovators Dilemma" to showcase their failures to innovate based on the fact that they had a huge customer base they didn't want to disrupt, again in the name of quartely earnings and appeasing Wall Street. Fast forward 7+ years and PAN has eaten it's competition, but hasn't innovated in 4+ years. Now the company just buys up competition preemptively and will eventually realize the same fate Checkpoint did. Nir has fallen victim to his own hypocrisy. Successful? For sure. But that doesn't change the reality of their focus today (profit) vs earlier (R&D). I think these cycles are natural and likely good for innovation within industries. Will BMW survive? Most likely. But over the next couple of decades they may be forced to reinvent, and as the article states they may be behind the rest of the pack playing catch-up due to the debt of not moving early and ignoring the intrinsic market signals.
- snowwrestler 7y ago
  As an aside, I’m curious: who do you think will do to PAN what they did to Checkpoint and other firewall vendors? If PAN is not innovating, who is? Thanks.
  - windexh8er 7y ago
    Honestly, nobody - yet. Keep in mind Checkpoint also had a good 6+ year run after innovation really shifted to sales and profit. I think the disruption comes in the SDN space focusing on organic aspects within. The next buzz in software defined is SDS (software defined security). PAN did just buy Twistlock, but that model isn't disruptive IMO. The hardware firewall is effectively dead. With TLS 1.3 and HTTP/3 they will be relegated to a clunky door stops in the network. PAN is on a buying spree to get ahead of what they can't figure out how to develop and get ahead of the looming drop in hardware sales. Look at "Prisma" or "Cortex XD". Effectively rename and rebrand existing, legacy products that didn't sell and aren't effective that marketing got a hold of. Prisma is just PAN running VMs in the cloud for customers on GCP. A) That's a horrible model for efficiency because the underlying technology is still the same (OpenVPN/IPsec) and B) it's a great model for sales because they upcharge like nuts for something simple to run. Finally, PAN wants to sell anyone and everyone an ELA. Why? Because they can't sell the majority of their bought and paid for product line item by item. So instead of try they get customers hooked into paying 10, 15, 20 percent more than what they would have buying some firewalls and they toss in software for "free" knowning very well that said customer likely won't use half of it. It's also a great lockout model. Take the CASB space for example. Why not buy an ELA from PAN and get firewalls and Aperture included than buy firewalls and Netskope? There's no reason when you look at it through the lens of procurement and PAN knows this.
    - timgarner0 7y ago
      I would suggest taking a look at Hybrid Cloud Workload Protection. I can break down the buzzwords a little: - Hybrid Cloud = Works in an on-premises DC and public cloud(s) - Workload = Works on bare-metal servers, virtual machines, and containers - Protection = - Distributed micro-segmentation (enforced via host firewalls, as close as possible to the app, sometimes integrated with the app) - Vulnerability analysis (build time and/or runtime) - Exploit detection This is typically achieved via a small agent that runs on each "workload" backed by some type of centralized control appliance. Guess who one of the innovators in this space is? You might not believe it... Cisco. Right?! What goes around comes around. The CWP market is still somewhat nascent, but in my opinion, it is poised to explode. Like the parent pointed out, the days of traditional hardware firewalls - or even worse "virtualized" versions of said boxes - are numbered, like it or not. Disclaimer: I work on Tetration, Cisco's 3-year old in-house developed Hybrid Cloud Workload Protection product. That's right, not an acquisition. Oh, and did I mention, the whole thing is a SaaS that requires zero hardware?

windexh8er 7y ago

Exactly this. It seems to be a natural cycle in most industries where there comes out a viable disrupter. Newcomer comes in to lead the pack in a differentiated part of a given market. They lead for years and displace their existing counterparts who fail to pivot for the sake of short term profit. "How can we risk X number of quarters or even years to sink profits back into R&D to become better and compete for years to come? What about next quarter?". The message is always the same from the incumbent side: they claim they're not concerned as new tech is a niche, then they realize the miss and spread FUD, and then they half ass enter to see if anyone's paying attention but the product still isn't near their competitor. I saw this first hand in the firewall market starting back in 2012ish. Palo Alto Networks came to the plate with a fundamental shift. "Safely enable applications" was one of their original selling tactics. This went against other firewalls that were playing whack-a-mole with ports and IPs, where PAN was focusing on applications (App-ID). The founder, Nir Zuk, even made fun of his competitors (he had a very public rivalry with Gil Shwed, CEO of Checkpoint) by using "Innovators Dilemma" to showcase their failures to innovate based on the fact that they had a huge customer base they didn't want to disrupt, again in the name of quartely earnings and appeasing Wall Street. Fast forward 7+ years and PAN has eaten it's competition, but hasn't innovated in 4+ years. Now the company just buys up competition preemptively and will eventually realize the same fate Checkpoint did. Nir has fallen victim to his own hypocrisy. Successful? For sure. But that doesn't change the reality of their focus today (profit) vs earlier (R&D). I think these cycles are natural and likely good for innovation within industries. Will BMW survive? Most likely. But over the next couple of decades they may be forced to reinvent, and as the article states they may be behind the rest of the pack playing catch-up due to the debt of not moving early and ignoring the intrinsic market signals.

snowwrestler 7y ago
As an aside, I’m curious: who do you think will do to PAN what they did to Checkpoint and other firewall vendors? If PAN is not innovating, who is? Thanks.
- windexh8er 7y ago
  Honestly, nobody - yet. Keep in mind Checkpoint also had a good 6+ year run after innovation really shifted to sales and profit. I think the disruption comes in the SDN space focusing on organic aspects within. The next buzz in software defined is SDS (software defined security). PAN did just buy Twistlock, but that model isn't disruptive IMO. The hardware firewall is effectively dead. With TLS 1.3 and HTTP/3 they will be relegated to a clunky door stops in the network. PAN is on a buying spree to get ahead of what they can't figure out how to develop and get ahead of the looming drop in hardware sales. Look at "Prisma" or "Cortex XD". Effectively rename and rebrand existing, legacy products that didn't sell and aren't effective that marketing got a hold of. Prisma is just PAN running VMs in the cloud for customers on GCP. A) That's a horrible model for efficiency because the underlying technology is still the same (OpenVPN/IPsec) and B) it's a great model for sales because they upcharge like nuts for something simple to run. Finally, PAN wants to sell anyone and everyone an ELA. Why? Because they can't sell the majority of their bought and paid for product line item by item. So instead of try they get customers hooked into paying 10, 15, 20 percent more than what they would have buying some firewalls and they toss in software for "free" knowning very well that said customer likely won't use half of it. It's also a great lockout model. Take the CASB space for example. Why not buy an ELA from PAN and get firewalls and Aperture included than buy firewalls and Netskope? There's no reason when you look at it through the lens of procurement and PAN knows this.
  - timgarner0 7y ago
    I would suggest taking a look at Hybrid Cloud Workload Protection. I can break down the buzzwords a little: - Hybrid Cloud = Works in an on-premises DC and public cloud(s) - Workload = Works on bare-metal servers, virtual machines, and containers - Protection = - Distributed micro-segmentation (enforced via host firewalls, as close as possible to the app, sometimes integrated with the app) - Vulnerability analysis (build time and/or runtime) - Exploit detection This is typically achieved via a small agent that runs on each "workload" backed by some type of centralized control appliance. Guess who one of the innovators in this space is? You might not believe it... Cisco. Right?! What goes around comes around. The CWP market is still somewhat nascent, but in my opinion, it is poised to explode. Like the parent pointed out, the days of traditional hardware firewalls - or even worse "virtualized" versions of said boxes - are numbered, like it or not. Disclaimer: I work on Tetration, Cisco's 3-year old in-house developed Hybrid Cloud Workload Protection product. That's right, not an acquisition. Oh, and did I mention, the whole thing is a SaaS that requires zero hardware?