For whatever reason, the pace and number of network security threats is growing daily. Network security experts say there are more Internet bogeymen than ever before, and they are multiplying fast. This explains the large move in the security equipment market to firewalls that can scale to gigabit speeds and incorporate all sorts of new packet-scanning features such as anti-virus protection and intrusion detection services (IDS).
“It’s like an arms race between the hackers and the guardians,” explains Mike Arnavutian, head of security strategy at BT Global Services, who was interviewed in the recent Light Reading Insider, Light Reading's paid subscription research service.
“The challenge is keeping up with the new forms of attacks," he warns. "The sophistication of the attacks is growing, as is the ease with which they can be launched. So you're getting fairly clueless people getting ahold of hacking software and bringing down organizations.”
So, the big question is, who’s going to clean this stuff up?
Obviously, the technology and software vendors are working on it. There is a proliferation of new firewall, anti-virus, and IDS kit. The big equipment and software trend is to look deeper into packets and filter content with more high-powered wire-speed equipment (see Security God in the Making?). But technology only goes so far – somebody has to put it together and manage it. It seems to me, the natural place for this to happen is at the service provider level.
It’s clear that the market is already moving in this direction, as reported in our June Light Reading Insider, Managed Security Services: The Safe Bet. The Insider, which interviewed dozens of service providers and vendors alike, concludes that hardware and software vendors are building products that allow security functions to be accessed from network-hosted equipment, allowing managed security service providers (MSSPs) to relinquish the role of system integrator. MSSPs can deliver the “clean pipe” to the customer's network.
“Being able to support 200 or more firewall customers on each box enables cost savings of up to 25 percent over customer premises equipment-based security,” according to Insider sources.
Time for today’s metaphor: Think of your water supply. Would you rather pay for a steady supply of clean, trusted water from your water company, which can invest in industrial-strength equipment; or would you rather spend your weekends installing and managing the technology to clean the water up as it enters your home? If the water company could do it at a cheaper price – and the economies of scale are clearly in its favor – certainly you’d pay a few extra cents for the service.
Or, alternatively, think of those home-security systems. You can hire a company for a few dollars a month to install sensors and alarms and monitor your house while you’re away. That’s a lot more affordable and convenient than paying a security guard to sit outside your door – or installing and managing the security system yourself.
In short, the telecom world’s got to figure out how to deliver its own version of cleaner pipes and managed security.
Many service providers see the opportunity in this market. Service providers like AT&T and Equant told Light Reading Insider they are seeing solid growth in this market. Equant, for example, expects its MSS revenues to increase to $60 million in 2004 from $37 million in 2002, with an ongoing CAGR of 45 percent.
Service providers desperately need to market new services, and it’s hard to think of something more important than security. The question remains, though, whether their enterprise customers want to outsource security or manage it themselves.
The reality is that both approaches will continue to work, and because the security market will grow overall, the managed security market will find a way to grow within this market. One advantage for the service providers is that, as the managers of global networks, they are positioned to have the widest understanding of global networking security threats and stay on top of emerging dangers.
The latest Insider surveyed hardware and software vendors, including:
- Check Point Software Technologies Ltd. (Nasdaq: CHKP),
- Cisco Systems Inc. (Nasdaq: CSCO),
- CoSine Communications Inc. (Nasdaq: COSN),
- Juniper Networks Inc. (Nasdaq: JNPR),
- Internet Security Systems Inc. (Nasdaq: ISSX),
- Network Associates Inc. (NYSE: NET), and
- Nortel Networks Corp. (NYSE/Toronto: NT)
- AT&T Corp. (NYSE: T),
- BTG plc (London: BGC),
- Equant (NYSE: ENT; Paris: EQU),
- IBM Corp. (NYSE: IBM),
- Infonet Services Corp. (NYSE: IN),
- MCI Inc. (Nasdaq: WCOEQ, MCWEQ),
- SBC Communications Inc. (NYSE: SBC),
- Siemens Information and Communications Networks Inc., and
- VeriSign Inc. (Nasdaq: VRSN).
The current Light Reading Insider report – “Managed Security Services: The Safe Bet” – is available here. A single-user license to the report is $900. An annual single-user subscription to the Insider is available for $1,350.