[ISN] Report: No slump for security biz

From: InfoSec News (isnat_private)
Date: Thu Aug 23 2001 - 02:10:50 PDT

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    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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