http://seekingalpha.com/instablog/3...246-cisco-taps-covata-help-encryption-upgrade
Cisco Taps Covata For Help With An Encryption Upgrade
Feb 25, 2016 3:00 PM | about stocks:
CSCO,
BOX,
PMLDY
The recent Apple, Inc. (NASDAQ:
AAPL) "will it unlock its iPhone or will it not unlock its iPhone" (via the well-advertised "backdoor" creation it's being asked to assist with) debate has gone a long way into bringing attention to overall security of information and overall data/information governance. For those not overly excited by the content of the topic - don't worry, you're not alone.
The average user of a smartphone has data that needs to be secured, sure; but the average user of a smartphone isn't trying to protect mission-critical or proprietary data that valuations are based on or around. That's a rare space that's occupied by large enterprises that help keep the economy in motion.
But is this true? I mean, is this
really true? Or is the "average smartphone user" now just an extension of the workplace (which is an extension of the enterprises needing to manage access and governance)? Some - actually plenty of young enterprises themselves - could and are arguing that the latter is the
real truth. I think the latter argument has a point. And I think the latter argument doesn't even really do justice as to
exactly how many of us are now included in this circle or ecosystem of protecting access to mission-critical, proprietary, valuation altering data/information.
One enterprise in particular that's seemingly trying to stay to the front end of this security curve is $132 billion market cap Cisco Systems, Inc (NASDAQ:
CSCO). Cisco recently announced that it had signed a 10 year agreement with an Australian encryption startup named Covata (
OTCPK
MLDY) - an agreement in which Covata would provide it encryption technology already within the Covata product portfolio as well as give it access to new Covata developments. Along these lines, Cisco has secured rights to deploy Covata's "Keys as a Service" (KaaS) encryption technology just as recently as a few days ago. I think this is meaningful for Cisco
and for $183 million market cap, ASX-listed Covata.
Covata's KaaS offering allows for what is currently unprecedented governance as well as
unprecedented ability to avoid governance application (although to be fair Box (NYSE:
BOX) and privately-held Dropbox have products out that presumably could play "catch up" given enough time; this didn't matter to Cisco, however, which chose to work with a little known startup). One example of what makes KaaS so special is its ability to allow for "geo-locational" governance. Put simply, it allows restriction of data/information access by, say, a country. Put even more simply, say for example a US-based financial services company with no Chinese operations, no Chinese employees, and no Chinese clientele didn't want any of its data/information to be access by anybody or anything within the country of China - it can now make that a reality. Yes, that's the level of governance we're talking about here. Cisco has taken notice.
An author by the name of "Bhupendra" at
iotleague.com recently penned a
note that I think quite artistically summarizes KaaS for those more technical-jargon savvy:
"KaaS service of Covata provides a tailored and scalable framework to protect content by full access remediation and supporting policy driven access.
Its Geo Location process is good enough to shift the entire focus from controlling data location to controlling encryption key location. If used well, KaaS can eliminate the widespread issue of protecting countless unstructured data pieces that are flowing around the internet.
With KaaS, data remains safe and encrypted round the clock. Any company having cross border operations can use geo-policy to block any key related to content that's not within the borders of a particular country. In such case, the data remains protected even if the device accessing it gets compromised in a foreign country."
Again, I think KaaS will be a superb security addition to the total war chest of technology being deployed at Cisco; but I think what this announcement does for Covata is game changing. Covata - an easy target from a logical takeout standpoint for larger, better capitalized competitors like Box and Dropbox - now has an easy to understand, wide adoption ready, marquee product. That matters.
Is the rest of Covata's platform offering impressive? It sure is. I've said as much in prior
coverage. But it's offering, and I think this is a fair statement prior to KaaS, could have easily been confused with much of what is being offered at Box and Dropbox. It could have been confused by the non-enterprise user (and potential equity investor) and it could have been confused by the
far more important enterprise customer. Now - not so much.
I think KaaS is huge for Covata and I think that the company having just a $183 million market cap in a space full of billion dollar valuations matters. Doesn't it make sense if you're Box or Dropbox to at least look into the impressive customer list at Covata now that it has a unique, patent (pending) protected solution? I think it does. Apparently I'm not alone - Covata's equity has been on the move since the Cisco announce of KaaS. It's no surprise why.
Regardless of eventual exit opportunities Covata now looks primed to sell KaaS - assuming it can show some early success - further into an existing, massive customer (Cisco) with what equates to a long-term offtake agreement for its products. If Covata's KaaS proves out to be something special, it sure looks like it might, who knows - Cisco might step in and purchase the company itself in an effort to simply "purchase R&D"; this is a tactic not unknown to the networking and communication device giant. A simple Google search of "Cisco Acquired R&D" will provide a crash course in Cisco's long-standing strategy to "acquire R&D" rather than fund it entirely in-house.
In any case, we now move forward into a new chapter in the data/information protection story and it's a story of growing sophistication. I'll be watching with interested eyes. Good luck everybody.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Stocks:
CSCO,
BOX,
PMLDY
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