Opinion
How 200 cybersecurity companies became 11 giants
The rapid pace of cyber acquisitions in Israel and around the world is sending the industry into a tailspin, completely reshaping its landscape. Moshe Karako, Chief Technology Officer at NTT Israel, explains why this is happening now and whether the dream of building new cyber giants has faded
In recent months, it feels as though almost every month brings news of another Israeli cyber company being sold for enormous sums. And it’s not just a feeling: the cybersecurity industry is undergoing a rapid and unprecedented wave of consolidation. A comprehensive study published recently found that over the past 20 years, nearly 200 cyber companies have consolidated into just 11 dominant players. This phenomenon is not random but reflects a natural cycle of industrial maturity, known as “industrial consolidation.”
The Four Stages of Industrial Consolidation
According to a study by the Harvard Business Review, every industry passes through four defined stages: the opening stage – the first companies rush to build barriers to entry and expand globally; the growth stage – an aggressive race in which the top three players control 15–45% of the market; the focus stage – competition intensifies, leaving 5–12 major companies, with the top three controlling up to 70% of the market; and the balance and alliance stage – consolidation slows, and the top three players control 70–90% of the market, while the rest disappear or become irrelevant.
Over the past decade, the cyber industry experienced explosive growth of startups – more than 5,000 companies now compete for the attention of CISOs. That was the industry’s growth stage. Today, it has entered the focus stage, where only a handful of dominant players remain in the fight.
A classic example of industrial consolidation is the U.S. defense industry. In 1993, U.S. Secretary of Defense Les Aspin hosted a dinner known as The Last Supper with the heads of the major defense firms. The message was clear: Cold War budgets were over, and the Pentagon could no longer sustain such a vast network of contractors. In the following decade, the industry underwent massive consolidation – hundreds of companies merged to form giants such as Lockheed Martin, Northrop Grumman, and Boeing.
The Current Cybersecurity Landscape
Today, the cyber industry is following a similar path. The list of top players has been established: Palo Alto Networks, Cisco, CrowdStrike, Microsoft, Google, IBM, Fortinet, Zscaler, Tenable, Cloudflare, Okta, and Check Point. Mega-deals are multiplying: Cisco’s $28 billion acquisition of Splunk, Google’s $32 billion acquisition of Wiz, and Palo Alto’s $25 billion acquisition of CyberArk are just a few of the most notable.
Palo Alto Networks, under the leadership of Nikesh Arora, has become the biggest driving force in the industry’s consolidation. The company has acquired 37 firms and leads in integrating security solutions into a unified platform. Cisco, for its part, has acquired more than 40 cyber companies but prefers to keep them as independent business units – two opposing strategic approaches.
Implications for the Future
This wave of consolidation is not just “another cycle” in the industry but a once-in-a-generation shift that will shape the next decade. For startups, the dream of building an independent giant is fading; the realistic goal is now acquisition. Even leading startups such as Wiz and Cyera were built, in practice, as acquisition targets from day one.
The cybersecurity industry is entering a decade of consolidation before it settles into the hands of a small group of giants. The good news is that opportunities won’t disappear – they’ll take new forms. As these giants grow, they will lose the ability to innovate and will continue acquiring smaller players, though in smaller numbers and at lower valuations.
For Israeli startups in particular, the new reality of the cybersecurity industry rests on a simple principle: Those who climb the consolidation curve fastest will succeed. Companies that secure critical ground early and move quickly up the curve will be the winners. Slower companies will become acquisition targets – or disappear altogether.
Ultimately, this is not just another business cycle – it is an existential struggle that will determine the fate of every company in the industry for the decade ahead.
Moshe Karako is the Chief Technology Officer at NTT Israel
