Are you bored with all of the talk in the U.S. about the “Fiscal Cliff” or the continuing “Sovereign Debt” crisis in Europe? Are you looking ahead to 2013, for a (pardon the expression) “secure” tech area to invest in with decent growth characteristics? Or, are you an IT professional curious about market trends in the enterprise security business? If you have answered yes to any or all of the above, than you might be interested in the Infonetics Research 3Q12 security market share and forecast reports: “Network Security Appliances” and “Software and Content Security Gateway Appliances, Software, and SaaS.” There is a little bit of something in each for anyone interested in the enterprise protection game.
Interestingly this is a tale of two markets that you would think would be moving in lockstep. The results may surprise you. Major hint: appliances and software are booming, but content gateways are in decline
Investment in appliances is increasing as are the threats
The report, which provides extensive numbers and analysis on the vendors of network security solutions found some interesting things going on in the market, which it believes is only going to heat up in the next few quarters. It looks at worldwide and regional market size, vendor market share, forecasts, analysis, and trends for integrated security appliances, secure routers, SSL VPN gateways, VPN and firewall software, and network-based intrusion detection and prevention (IDS/IPS) products.
Highlights in the appliance area included:
- Global network security appliance and software revenue is up a strong seven percent from the year-ago 3rd quarter
- Integrated security appliances have gained share every quarter since 4Q11, and Infonetics is forecasting continued quarterly gains through 3Q13
- Palo Alto Networks' successful IPO and strong financial performance have breathed life into the fairly stale integrated appliance market share picture, setting the stage for heated share battles in 2013
- Mobile malware is out of control: McAfee had fewer than 3,000 mobile malware samples in its database just a year ago, growing to around 25,000 samples today
Who are the vendors and what are their shares in this market which is now roughly $1.6 billion market, which Infonetics is expecting to grow to $6.7 billion by 2016? The answer is for the moment it is dominated by a few large and well known players. The reason this needs to be taken with some caution on a long-term basis is that there is intense investor interest in the area and the acceleration of startup activity could have a major impact going forward.
Commenting on his findings, Jeff Wilson, principal analyst for security at Infonetics Research noted that, “Looking at the top three network security vendors' quarter-over-quarter revenue performance, Cisco increased 1.5 percent, Check Point increased 3.2 percent, and Juniper increased 11.1 percent," notes. "Overall the network security appliance and software market saw moderately strong growth in the 3rd quarter and there is always potential for a great 4th quarter because of seasonal budget flush."
What caught my attention was the mobile malware challenge. The BYOD phenomena show no signs of abating, and are actually likely to accelerate. And, the use of personal devices in enterprises present major risks on several levels —from the people who use them to the apps they use and the various types of malware their use can spread across the enterprise. Talk about a growth opportunity!
A bit of discontent about content
On the content security gateway side of things, the vendors change a bit and the market is in flux to put it mildly. Infonetics says the $719 million market has now fallen three quarters in a row.
Highlights, or low lights in this case, in the market were:
- Revenue fell 0.4 percent between 2Q12 and 3Q12, to $719 million
- Blue Coat was the only vendor in the content security gateway market to see a significant increase in revenue in 3Q12 (up 15 percent from the previous quarter), bouncing from #3 to #2 in overall market share
- Software now makes up 37 percent of all content security gateway revenue
Wilson, who was also the author of this analysis, had this to say about the market: “Companies with broad security product portfolios can, if they are nimble, shift revenue by continuing to integrate web and mail security functions into firewall and IPS platforms while maintaining standalone solutions. Focused content security companies will be forced to broaden their product portfolios, get acquired, or develop strong partnerships to grow revenue.”
What this seems to portend is that the relatively quiet integrated solutions market is about to heat up in 2013. This maybe a case when it comes to the vendors of the rich getting richer and the poor (point solutions providers) struggling or dying. However, as noted, the security area in general is one being given close scrutiny by entrepreneurs and investors, and with all of those tablets and smartphones invading enterprises around the world, the charts above at this time next year are probably going to look very different.
Edited by Brooke Neuman