Check Point, Fortinet gain on network security appliance leader Cisco

Juniper Networks drops from 9 percent to 7.9 percent market share
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Check Point (Nasdaq: CHKP) and Fortinet (Nasdaq: FTNT) both posted double-digit year-over-year revenue growth in the network security appliance market for the third quarter of 2012, gaining market share on Cisco (Nasdaq: CSCO) and Juniper Networks (NYSE: JNPR), according to stats released this week by IDC.

The network security appliance market includes firewalls, virtual private networks (VPNs), unified threat management, intrusion detection systems and intrusion prevention systems (IPS), as well as web and messaging security.

John Grady, research manager for security products at IDC, attributed the disappointing showing of Cisco and Juniper to delays in refreshing their product lines.

"Cisco's addressed this with their new ASA 5500-X lines, which are just beginning to ramp up sales wise now. Because of Juniper's focus on the high-end service provider and telco segments, their business tends to be more up and down. They've definitely had some execution issues as well, but the longer sales cycles haven't helped," Grady told FierceEnterpriseCommunications

On the other hand, Check Point has seen "very good traction with their new appliance line-up and with their large installed base they're benefiting from a lot of follow on revenue. Fortinet continues to do well across the board, especially in more distributed enterprise environments, where their broad product line-up addresses multiple segments of the network," he explained.

Cisco maintained its leading position in the market, with 16.2 percent market share in the third quarter, although this was down 1.5 percent from its 17.3 market share in the same quarter last year.

Second place Check Point saw its revenue grow 12.8 percent year-over-year, increasing its market share to 12.8 percent in the third quarter, while fourth place Fortinet experienced a healthy 17.2 percent revenue growth year-over-year, pushing its market share to 5.9 percent.

Third place Juniper saw its revenue drop 6.4 percent, and its market share shrink to 7.9 percent from 9 percent in the same quarter last year. Rounding out the top five, Intel's (Nasdaq: INT) McAfee saw a respectable 5.3 percent revenue growth, which kept it at a 5.7 percent market share.

While Cisco and Juniper struggled in the third quarter, the two companies did experience strong revenue growth in the firewall and virtual private network (VPN) segment, which posted a 7.3 percent year-over-year revenue growth.

Network security appliance factory revenue increased 5.7 percent year-over-year to $2 billion in the third quarter, and shipments increased by 1 percent to 499,022 units. In the U.S., factory revenue increased 4.6 percent, fueled by demand from larger enterprises and service providers. However, U.S. shipments decreased 1.2 percent year-over-year.

The largest segment, accounting for one-third of network security appliance revenue in the third quarter, was unified threat management (UTM). That segment posted a 24.3 percent year-over-year revenue growth.

"Multi-function appliances (typically counted under the UTM label in our taxonomy) are expected to see by far the strongest growth in the market. Traditional firewalls and stand-alone VPN gateways will decline. IPS will see some growth, but not to the level of UTM. There's still a use case for stand-alone IPS. We're seeing a move towards advanced threat protection on the IPS platform, and data center specific deployments will both serve to buoy the market a bit," Grady observed.

In the face of increasing attacks against their networks, enterprises are increasing their spending on network security, according to a survey of chief information officers (CIOs) conducted by Gartner last year. A full 45 percent of CIOs surveyed said they expected a security budget increase, while 50 percent said they expected their security budgets to remain the same.

Grady agreed that the increasing attacks have fueled enterprise interest in security products. "With the increasing number of high-profile breaches, security is much more top of mind for all executives, not just IT and security specific personnel. This has definitely helped security become a more strategic investment, even with overall budgets somewhat constrained as they are," he concluded.

For more:

- see IDC's release

- check out the Gartner release

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