Security appliances benefit from scares
Published: 19 Sep 2003 13:10 BST
Sales of security server appliances grew 10 percent in the second quarter, as sales of low-end appliance servers dedicated to firewalls and virtual private networks helped bolster the industry, according to an IDC report released on Thursday.
The double-digit, year-over-year second-quarter growth is in contrast to the roughly 5 percent decline in the first quarter, as companies look to beef up their security in light of the recent spate of worms and viruses.
"As worms keep popping up, that leads to a desire for increased security," said Charles Kolodgy, research director for IDC's security-products service. "And the easiest way to set up a network is with security server appliances. We're seeing people buy low-end firewall and VPN appliances."
NetScreen Technologies, which ranked second among security-appliance vendors, was one company that benefited from the industry's increased demand for security appliances. NetScreen increased its second-quarter revenues by 92 percent to $53.2m (£32.91m). And its market share grew to 16 percent in the quarter from 9.1 percent a year ago. NetScreen makes servers prebundled with firewall, VPN and other software.
"NetScreen has (addressed) a lot of price-performance issues with their security appliances. They are ASIC-based, and they are an alternative to Check Point Software and Cisco," Kolodgy said. "Their intrusion-detection product is one that we expect will be growing well through the end of the year."
But not all security-appliance vendors performed as well. In fact, NetScreen was the only one of the top five vendors to increase its market share in the quarter and one of two in the top five to post revenue gains in the quarter.
Cisco Systems, for example, was able to maintain its sizable lead in the security-appliance market with $114.4m in sales during the second quarter, but its revenues and market share were down compared with last year, according to IDC. Cisco's revenues fell 1 percent in the quarter, while its market share declined to 34.3 percent in the period, from 38 percent last year.
Nokia and SonicWall, ranked third and fourth respectively, also encountered declining revenues and market share during the quarter. Nokia posted a 15.3 percent revenue drop, to $44.1m in the three-month period, while its slice of the market contracted to 13.2 percent from 17.1 percent the year earlier. SonicWall, meanwhile, suffered a 16.5 percent fall off in revenues, to $17.9m in the quarter, while its market share dropped to 5.4 percent from 7.1 percent.
And WatchGuard, which was ranked fifth, squeezed out a 4.8 percent increase in second-quarter revenues, but its market share edged down slightly, to 4 percent from 4.1 percent a year ago.
"These companies haven't grown as much because they are coming out with new products and, in some respects, they have to clear out old inventory," Kolodgy said. "I expect SonicWall and WatchGuard will have some growth in the next quarter, but it's hard to say about Cisco because they are so large. The other players beyond the top five are doing well. The No. 6 vendor, Symantec, is growing considerably, and the smaller vendors are having decent growth."
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