Western European Security Appliance Market Resists Economically Difficult Final Quarter, and Even Shows Growth, Says IDC

LONDON – March 26, 2009 – According to IDC's Western European Quarterly Security Appliance Tracker, 4Q08 revenues for the Western European security appliance market reached $385.1 million in factory revenue, a 10.1% increase over the same quarter of the previous year. However, shipments decreased by 16.7% over 4Q07, with 130,287 units shipped. For full 2008, security appliance market revenue totalled $1.48 billion, representing 14.4% growth over 2007.

"Despite a very challenging time for all technologies, the security appliance market is still showing healthy growth over last year," said Romain Fouchereau, research analyst at IDC. "However, while there was a decline in general IT spending, organizations in Western Europe will continue to face major security threats and increased compliance regulations. They cannot afford not to protect their data, information systems, and intellectual property."

The firewall (FW)/VPN market represented $92.66 million in 4Q08, a 3.2% increase over 4Q07. The FW/VPN market is becoming more mature in Western Europe and has seen slow growth in recent quarters. However, continuing a trend that IDC saw a few quarters ago, 4Q08 saw very strong growth for higher-end firewalls. Lower-end firewall appliances didn't perform as well, as end customers prefer to deploy unified threat management (UTM) appliances rather than dedicated FW/VPN. Cisco remained the number 1 vendor in the segment, followed by Juniper Networks and Nokia.

UTM represented the largest market of the tracked security appliances, with total revenue of $130.27 million in 4Q08, corresponding to 18.3% growth over 4Q07. During this time of economic uncertainty, UTM vendors should do relatively well due to the integrated solutions offered by UTM appliances; customers will want more for less from vendors. Fortinet was market leader, followed by Cisco, with Check Point in third position.

IDS appliances revenue reached $6.66 million in 4Q08, a 4.6% decrease over 3Q07. This market will cease to grow due to the shift towards intrusion prevention systems (IPS). IPS grew by 22.9% over 4Q07, representing an $87.49 million market. IPS growth is driven by compliance, particularly PCI in Europe, and IDC believes that with more and more compliance issues coming to Europe, IPS solutions will continue to increase. The IPS market should become the second largest security market by 2010, taking over the FW/VPN market. Cisco was market leader in both the intrusion detection systems (IDS) and IPS markets, followed by IBM ISS and TippingPoint for IPS.

Content management appliance revenue grew by 10.6% year on year, reaching $68.09 million in 4Q08. The messaging security and Web security segments of secure content management (SCM) are following the same evolution as the threat management market, from software to appliance form factor. Given the fact that security appliances can lower costs, ease administrative overheads, facilitate management, consolidate support, scale efficiently, and integrate multiple security technologies into a single platform, their success is not surprising in the SCM market. Cisco (IronPort) remained the number 1 vendor in the content management appliance segment and the messaging security subcategory. Secure Computing led the Web security appliance submarket, while McAfee dominates the Web and messaging subcategory.

Top 5 Vendors, Western European Security Appliance Market Factory Revenue ($M), 4Q08

Vendor 4Q07 Revenue 4Q07 Market Share 4Q08 Revenue 4Q08 Market Share Growth 4Q08/4Q07

Cisco $101.30 25.5% $113.12 29.4% 11.7%

Juniper $34.69 9.9% $24.37 6.3% -29.7%

Fortinet $16.98 4.9% $23.16 6.0% 36.4%

Nokia $15.05 4.3% $15.94 4.1% 5.9%

IBM ISS $8.01 2.3% $13.55 3.5% 69.2%

Others $173.9 49.6% $195.02 50.6% 12.1%

Total market $349.93 100% $385.16 100% 10.1%

Source: IDC, 2009

Top 5 Vendors, Western European Security Appliance Market Factory Revenue ($M), 2008

Vendor 2007 Revenue 2007 Market Share 2008 Revenue 2008 Market Share Growth 2008/2007

Cisco $391.90 30.4% $472.33 32.0% 20.5%

Juniper $129.94 10.1% $107.90 7.3% -17.0%

Fortinet $54.00 4.2% $69.91 4.7% 29.5%

Nokia $54.95 4.3% $58.58 4.0% 6.6%

Secure Computing $45.09 3.1% $46.12 3.1% 2.3%

Other $615.10 47.9% $722.59 48.9% 17.4%

Total market $1,290.98 100% $1,477.41 100% 14.4%

Source: IDC, 2009

IDC's Quarterly Security Appliance Tracker offers the ability to quickly and effectively respond to today's dynamic security server appliance market by keeping pace with evolving functionality and the rapid deployment of new models competing in the marketplace. The product provides insight into customer trends by delivering geography-specific product line and vendor market share information in an easy-to-use product interface, enabling quick table customization for business planning activities.

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