VPNs & Firewalls Lead Security Market

Despite the growing popularity of all-in-one security devices, two distinct product areas are driving most security revenue, according to the latest Infonetics Research Inc. "Network Security Appliances and Software Report."

In the second quarter of this year, VPNs (virtual private networks) and firewall hardware and software accounted for 78 percent of the $1 billion spent on security products, says the analyst firm. Intrusion detection systems (IDSs) and intrusion prevention systems (IPSs, duh) made up 14 percent, and gateway antivirus products accounted for the remaining 8 percent.

VPNs have certainly staked their claim in enterprise data centers recently. Last year, a Heavy Reading report identified Secure Sockets Layer (SSL) VPNs as one of the hottest parts of the technology sector (see Heavy Reading Analyzes SSL VPNs).

This trend is set to continue over coming years, at least according to Infonetics. VPN and firewall revenues are set to grow from $2.9 billion in 2004 to $4.7 billion in 2008. Revenue from gateway antivirus products is set to rise from $200 million to $700 million between 2004 and 2008. IDS and IPS technologies, however, will grow from $500 million to $1 billion over the same period.

Figure 1: Source: Infonetics

But Jeff Wilson, principal analyst at Infonetics, has noticed a new trend emerging in the security market. A number of vendors, such as Fortinet Inc., and Symantec Corp. (Nasdaq: SYMC) have started offering security God-boxes with a range of different technologies packed onto one device (see Symantec Speeds Up and Fortinet Fuses SSL & VOIP).

Wilson says some vendors are leaving VPN and firewall functions out of these security combos, preferring instead to offer them as a supplement to existing firewall and VPN technologies. We’ll keep a close eye on this segment as it emerges,” he promises.

With users facing a bewildering array of security threats, the overall market for network security appliances and software is growing at a steady rate, climbing 4 percent to $1 billion between the first and second quarters of this year.

This is more or less in keeping with the 5 percent growth the market experienced between the fourth quarter of 2004 and the first quarter of 2005 (see Network Security Up in 1Q05).

But the market is going to experience an upsurge during the coming year. Infonetics expects that quarterly revenues will grow 23 percent to $1.3 billion by the second quarter of 2006. Annual revenues are expected to reach $6.4 billion by 2008, up from $3.6 billion in 2004.Overall, Cisco Systems Inc. (Nasdaq: CSCO) maintains its pole position in the network security and appliance market, with 34 percent of worldwide revenues, followed by Check Point Software Technologies Ltd. (Nasdaq: CHKP) with 10 percent and Juniper Networks Inc. (Nasdaq: JNPR) with 8 percent.

— James Rogers, Site Editor, Next-Gen Data Center Forum