Report: No slump for security biz

[InfoSec News <isn () c4i org>]

http://www.zdnet.com/zdnn/stories/news/0,4586,2806762,00.html?chkpt=zdnn_nbs_hl

By Robert Lemos
ZDNet News 
August 22, 2001 3:04 PM PT
 
The earnings potholes hit by high-technology companies over the past
year will be largely avoided by the Internet security industry,
according to a report released Wednesday by market researcher IDC.

While PC makers and dot-coms have been hit hard by the tech slump,
most network and computer security companies continue to stand their
ground. Worldwide revenue grew by more than 33 percent in 2000, and
that's expected to continue, IDC said in the report.

By 2005, IDC predicts the Internet security market will tally more
than $14 billion a year in revenue, up from $5.1 billion last year.

"For security software vendors, the current economic instability is a
double-edged sword," Brian Burke, senior research analyst at IDC, said
in a statement.

"On the one hand, it's forcing companies to reduce spending. On the
other hand, it's forcing companies to look for ways to cut costs,
become more security-proficient and build trusted relationships with
customers, partners, suppliers, and channels--which are areas security
software can help."

The report breaks the Internet security industry into four markets:
firewalls, encryption, antivirus and the AAA (authentication,
authorization and administration) market, each of which is expected to
grow 23 percent per year, on average. The AAA market will lead the
way, said the report, growing annually by 28 percent on average to
amass $9.5 billion in revenue in 2005.

That's a break from last year, when firewalls led the pack with annual
growth of 42 percent.

Firewall maker Check Point Software announced in July that it beat
earnings estimates for the quarter, with revenue up 57 percent from
the same quarter the year before. While it fell $3 million short of
its revenue target, the company expects profits to be up 50 percent
this year.

"We are in one of the must-have areas of security," said Asheem
Chandna, vice president of product management and business development
for Check Point. Firewalls that help keep intruders and unwanted
access attempts out are considered a necessity for any company doing
business on the Net, he said. In addition, the company's virtual
private networking (VPN) software can help cut costs, allowing
companies to create secure remote connections to their networks.

"In a tight spending environment, companies who implement VPNs sooner
rather than later can save a lot of money," Chandna said.

Some companies in the security industry have fallen on hard times.
Internet Security Systems, Entrust, Network Associates and Bindview
Development have all posted losses in their most recent quarters.

However, others, such as Symantec and RSA Data Security, continue to
be healthy.

"Basically, what is happening is that any company connecting their
offices to the Internet or doing business over the Internet needs
security," Chandna said. "And we are a beneficiary of that."

 


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