Security Appliance Market Continues on Strong Growth Trajectory in First Quarter of 2012, According to IDC

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According to the International Data Corporation (IDC) Worldwide Quarterly Security Appliance Tracker, both factory revenue and unit shipments grew in the first quarter of 2012 (1Q12) marking the eighth consecutive quarter of year-over-year growth. Worldwide factory revenue was up 9.7% year over year to $1.9 billion as shipments increased 12.9% to 511,220 units.

Geographically, all regions with the exception of Asia/Pacific (excluding Japan) saw double-digit growth in unit shipments. Shipments grew fastest in Central & Eastern Europe with an impressive 39.3% year-over-year increase, marking the seventh consecutive quarter with double-digit unit growth. The United States saw the biggest year-over-year gains in factory revenue (16.2%), due to increased high-end firewall and IPS shipments in the quarter.

"The increasingly complex nature of IT security along with the growing threat landscape has the potential to affect operations and cause significant disruptions and the loss of sensitive data," said Ebenezer Obeng-Nyarkoh, senior research analyst, Worldwide Trackers Group. "Security products are expanding rapidly into other small, fast-growing geographies where demand is greater than ever."

The combined shares of the top 5 global vendors increased to 50.7% in the first quarter of 2012. Cisco continues to lead the overall security appliance market with 18.4% share in factory revenue for the first quarter. Check Point held the number 2 spot with 12.7% share for the quarter as revenue increased 25.9% compared to the first quarter of 2011. Juniper was the only top 5 vendor that saw share loss (0.7 points year over year) and saw a modest 0.8% year-over-year increase in revenue. McAfee and Fortinet gained roughly half a percent of market share compared to the prior year's period, as both saw strong double-digit growth.

Functional Market Results

At the functional market level, the Firewall/VPN segment saw the largest year-over-year revenue growth at 23.3% and accounted for 28.3% of the overall security appliance market in 1Q12. This was due in large part to Cisco's growth and a strong quarter for Juniper's high end SRX, despite weakness elsewhere in the portfolio. The Unified Threat Management (UTM) market represented 28.5% of security appliance revenues thanks to 12.2% year-over-year growth. Content management saw more modest year-over-year revenue growth of 5.3% as its share of the overall appliance market fell to 17.7%. Standalone VPN was the only market to post a decline versus the prior year (–10.2%) and accounted for 7.9% of the market.

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"Increasingly, customers are requiring products that protect against a variety of threats, lower the total cost of ownership, and offer more streamlined management," said John Grady, senior research analyst, Security Products at IDC. "The UTM market, which includes most application-aware, next-generation firewalls fulfills these requirements. As such, IDC expects to see continued strong growth in this market segment."

IDC's Worldwide Quarterly Security Appliance Tracker is a quantitative tool for analyzing the global security market on a quarterly basis and is available on demand. The Tracker includes quarterly shipments and revenues (both customer and factory), segmented by vendor, family, model, region, operating system, price band, and security functions.
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