The rapid spread of business-to-business and collaborative commerce initiatives is having a marked effect on the IT security sector. According to analyst group IDC, efforts to integrate Internet technologies with enterprise applications are having a "significant impact" on European business security policy, with 20% of companies being forced to completely redefine their security strategies due to the integration needs of Internet applications.
As a result, analyst group AMR believes that security spending should account for approximately 3% of the total IT spend of most organisations over the coming year. Much of that spend, says Catherine Quirk, an analyst at AMR, will be channelled into more "strategic concerns" such as authentication and authorisation technologies. But there will also be continued investment in software for virus protection, firewalls and intrusion detection – all generally considered to be ‘the first line of defence'.
In Europe, the large enterprise market for firewalls is very mature, but firewall appliance vendors can expect to see increasing demand from small and medium sized enterprises (SMEs), says Frost & Sullivan. Firewall software and hardware appliance vendors generated sales of $409.1 million (€466.7m) in 2000, a figure Frost & Sullivan expects will reach $1.25 billion (€1.4bn) by 2005.
There will also be a change in balance between hardware and software sales. 2001, says Frost & Sullivan, was the first year that appliances generated higher revenues than firewall software. That trend is expected to continue and, by 2005, software will account for 38.3% of the overall firewall market, with appliances accounting for 61.7% of the market, says Frost & Sullivan.
SMEs' increased interest in firewalls is in part due to their convergence with virtual private network (VPN) services, says Frost & Sullivan. Many integrated firewall products now incorporate VPN capabilities and may even offer dedicated VPN devices and router-based hardware alongside the firewall appliance.
This convergence, says Frost & Sullivan, will continue to drive growth in the firewall appliances market through 2005.
According to research from IDC, Internet protocol (IP) VPNs are becoming mainstream in Western Europe, and the market will be worth more than $5.4 billion (€6.2bn) by 2005, compared with $873.1 million (€996.1m) in 2000. Routers will account for the largest share of revenues from IP VPN-enabled equipment, with firewalls taking the number two spot in 2005, says IDC.
A number of firewall software vendors are dealing with market changes and convergence with VPN technology by extending into the quality of service (QoS) software and intrusion detection markets, says Frost & Sullivan.
Vulnerability assessment and intrusion detection systems have seen fast, but still limited growth due to the "inherent difficulties in implementation", says Frost & Sullivan. Vendors have to simplify their products so that non-technical business users can use them before the market can achieve higher levels of growth it adds.
Nonetheless, European licence revenues for vulnerability assessment and intrusion detection systems are expected to rise to $182.2 million (€207.9m) in 2005 from $58.3 million (€66.5m) in 2001.
In 2002 Frost & Sullivan expects that vulnerability assessment will become increasingly popular.
Intrusion detection systems, to a certain extent, still have to prove their business value. Guy Chaigneau, a research analyst at Frost & Sullivan, says: "Vulnerability assessment is rising in popularity on the strength of its ability to determine what needs to be secured in the enterprise."
By 2005 he expects it to take "the lion's share" of the vulnerability assessment and intrusion detection systems market.