The field security appliance market just got smaller – – or larger. Innominate was one of the first companies to develop a firewall for the plant floor or SCADA field sites. We have covered them in the blog over the years.

Innominate announced at Hannover Messe that they had been acquired by Phoenix Contact. This announcement can be viewed a few ways. Perhaps this was always the plan by Innominate. Many security technology product companies are created with the plan of being acquired after the product is proven. Maybe they got an offer that was too good to refuse. Or maybe they took a hard look at the field security appliance market from their experience and saw this is a really tough market to make money in.

We analyzed the business case for developing and selling field security appliances in 2006. The numbers did not add up then, and we don’t see this changing. It still is the case that most asset owners have many more effective ways to reduce security risk than purchasing, deploying and maintaining field security appliances. We are not saying the sales will be zero, or even that they will not grow. But when you run the numbers it is hard to see how a company makes money in that space until the product gets included as either a free or very low cost option integrated into the field device. This would be an entirely different business case, similar to selling a protocol stack or ASIC.

Since the terms of the acquisition where not disclosed, it is hard to evaluate the value of a field security appliance company. The market now has a much larger participant but less focused participant in Phoenix Contact. It will be interesting to see what kind of attention the mGuard gets in this larger organization and where they take the technology.