Rivals Stand to Gain
The recent CrowdStrike debacle, which resulted in a bug in their Windows software rendering PCs unusable, has caused significant disruptions. Flights were disrupted, elective medical treatments were cancelled, and office workers were left with nothing to do for hours. Unsurprisingly, CrowdStrike’s stock price plummeted as a result. However, this incident has created an opportunity for their competitors to gain an edge.
Competitors such as SentinelOne and Palo Alto Networks saw their stock prices climb by as much as 10% following the CrowdStrike outage. CrowdStrike competes with these companies but also faces competition from the likes of Microsoft, Trellix, Trend Micro, and Sophos in the endpoint security market. Endpoint security tools are crucial for detecting malware on devices that have access to corporate networks, such as laptops and mobile phones.
According to data from Gartner, CrowdStrike had an estimated 14.74% share of global revenue from security software sales as of year-end 2023, amounting to roughly $2.01 billion. This made them the second-largest player in the market, with Microsoft taking the lead with a 40.16% share ($5.49 billion). Their closest competitor, Trellix, held a 6.62% share ($906 million) as of 2023.
Eric Grenier, a cybersecurity threat detection and exposure analyst at Gartner, believes that it is still too early to determine the winners of the CrowdStrike saga. However, he noted that Microsoft and SentinelOne are often shortlisted by clients he speaks with, and the recent events might solidify decisions in favor of CrowdStrike alternatives. Grenier expects CrowdStrike to face some loss in business as competitors can now use this incident as a selling point.
Not Everyone Agrees
Mike Jude, a research director at IDC, argues that competitors face similar risks as CrowdStrike in constantly adapting to the changing threat environment. Rapid responses can lead to critical mistakes, as was the case with CrowdStrike’s bug resulting from a routine update to their Falcon Sensor product. Jude believes that competitors would not celebrate this outage as it highlights the dependence on cybersecurity solutions.
Chirag Mehta, VP and principal analyst at Constellation Research, agrees with Jude and highlights that other vendors were fortunate not to be affected this time. Mehta believes they now have the opportunity to evaluate their integration with operating systems, update processes, and deployment methods. He emphasizes the danger of overconfidence in the cybersecurity industry.
Minimal Share Shifts Expected
Goldman Sachs analysts expect to see minimal shifts in market share within the endpoint security market due to the CrowdStrike bug. They argue that customers understand that incidents like these are bound to happen and care more about a fix and transparent communication. Cybersecurity products are held to a higher standard due to their critical nature and constant attacks from adversaries. The analysts believe this incident will reinforce the barrier to entry in the industry, favoring companies with best-in-class protocols and scale.
The Okta breach serves as a case study. In October 2023, hackers accessed data on all of Okta’s identity and access management customers. Despite the breach, Okta customers mostly stayed with the company, although some organizations had longer deal cycles as they evaluated other products. This example shows that while incidents like these raise concerns about software engineering practices, they also highlight the vulnerabilities in global cloud infrastructure.
In conclusion, the CrowdStrike outage has created an opportunity for their competitors to gain traction in the endpoint security market. While some analysts believe there will be a loss in business for CrowdStrike, others argue that competitors face similar risks and overconfidence can be dangerous. Ultimately, customers value a quick fix and transparent communication, reinforcing the need for reliable and secure cybersecurity products. The incident also highlights the vulnerabilities in global cloud infrastructure, emphasizing the importance of robust software engineering practices.
