Security Going Strong

Light Reading
News Analysis
Light Reading
2/27/2002



Security seems to be the one area that is still defying the economic downturn. Revenues for the sale of both virtual private networks (VPNs) and firewalls are expected to more than double by 2005, according to a report released by Infonetics Research Inc. last week.

In 2001, at a time when most companies were saving wherever possible, they were still spending on security. Last year, worldwide firewall revenues totaled $1.7 billion, says Infonetics, while dedicated VPN hardware revenues were $1.3 billion. By 2005, those numbers are expected to jump to $3.8 billion and $2.9 billion, respectively.

The worldwide market for VPNs grew 75 percent in 2001, with the highest growth in ROW (the "rest of the world," excluding North America, Europe, and Asia Pacific), where they pulled in $53 million in revenues, according the Infonetics report. That represents a 136 percent jump from 2000. In 2001, North America had the largest VPN market, with $786 million in revenues, up 74 percent from the year before.

While the report breaks out the revenues of firewalls and VPNs separately, Jeff Wilson, executive director of Infonetics Research and author of the report, says that the distinction is an artificial one. “Most firewalls have VPNs and most VPNs have firewalls,” he says.

Hardware-based solutions are dominating the growth of both firewalls and VPNs, according to Wilson. “Hardware is getting cheap and is very easy to use,” he says. “It’s like using a toaster instead of making a fire to toast your bread on. It’s just easier. It also pushes performance a lot higher than software.”

While it is easy to predict that companies will continue to spend money on security solutions in the future, it is much harder to say just how much. Wilson says the numbers for 2005 are basically just a guess.

“We have as much data as anyone can have, but right now 2002 is hard enough to predict. If you’re basing your business plan on 2005 forecasts, you’re in big trouble.”

Revenue is not all that's difficult to foresee so far in advance. Wilson says it's impossible to say which company will be the market leader in three years. “I don’t believe that there are any gorillas in the market yet,” he says, pointing out that Check Point Software Technologies Ltd. (Nasdaq: CHKP), which is the largest single player right now, only has about 30 percent of the market share. “There are leaders, but no gorillas.”

This lack of a dominating player allows new players on to the scene, and Wilson doesn’t rule out the possibility that an unknown might capture the market share lead by 2005. By the end of 2002, however, he expects that Check Point, Cisco Systems Inc. (Nasdaq: CSCO), NetScreen Technologies Inc. (Nasdaq: NSCN), Nokia Corp. (NYSE: NOK), and SonicWall Inc. (Nasdaq: SNWL) will still hold most of the market share.

The report shows that most of these lead players saw their revenues grow last year. Both NetScreen and SonicWall's revenues for the fourth quarter of 2001 grew about ten percent; Check Point’s revenues rose slightly between the third and fourth quarters; and Cisco’s firewall revenues grew, while its VPN revenues were down.

Infonetics Research also released a report last week about the Secure Sockets Layer (SSL) acceleration hardware market. This market segment grew 91 percent between 2000 and 2001, according to the report, totaling $111 million in 2001. That number is expected to grow to $145 million by the end of this year.

— Eugénie Larson, Reporter, Light Reading
http://www.lightreading.com

(0)  | 
Comment  | 
Print  | 
Copyright © 2019 Light Reading, part of Informa Tech,
a division of Informa PLC. All rights reserved.
Privacy Policy | Cookie Policy | Terms of Use