The Future of the Firewall Market: New Technology or Convergence?


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Frost & Sullivan analysis of the Future of the Firewall Market.

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The Future of the Firewall Market: New Technology or Convergence?

  1. 1. The Future of the Firewall Market: New Technology or Convergence? Chris Rodriguez Research Analyst Network Security June 3, 2010
  2. 2. Focus Points/Agenda •Firewall Market Size and Forecasts •Market Drivers •Market Restraints •Market Challenges •Emerging Trends •Unified Threat Management (UTM) market size forecasts •New Technologies and Performance Considerations •Key Competitors •Expectations for Future Growth •Conclusions 2
  3. 3. Technology Segmentation •The base year for world firewall market study is 2009, and the forecast period is for 2010 to 2016. •This market is segmented horizontally by small office/home office (SOHO), small and medium-size business (SMB), large enterprise, and service provider. •Vertical markets covered include telecommunications, government, financial, technology, manufacturing, healthcare, utilities, retail, education, travel and hospitality. •Geographic regions covered include North America, Asia Pacific (APAC), Latin America, and Europe, the Middle East, and Africa (EMEA). 3
  4. 4. Firewall Market Growth Projection Total Firewall Products Market: Revenue and Unit Shipment Forecasts (World), 2006-2016 Revenues ($ Million) Units (Million) 5,000 5.0 4,500 4,000 4.0 Revenues ($ Million) 3,500 Units (Million) 3,000 3.0 2,500 2,000 2.0 1,500 1,000 1.0 500 0 0.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Note: All figures are rounded; the base year is 2009. Source: Frost & Sullivan •In 2009, firewall vendors shipped 2.0 million products, earning $2,949.0 million in revenues. •Revenue growth slowed greatly in late 2008, 2009, and 2010 due to economic difficulty, among other factors. •The market is forecasted to reach $4,630.2 million in revenue by 2016, a compound annual growth rate (CAGR) of 6.7 percent. 4
  5. 5. Major Market Drivers Total Firewall Products Market: Market Drivers Ranked in Order of Impact (World), 2010-2016 Network Refresh Cycles Next Generation Firewall Functionality Large Enterprise New/Existing Superior Customers Evolving Threat Regulations Functionality than Demand Landscape and Require Embedded and Dedicated Emerging Mandatory Integrated Solutions Technologies Security Security Baselines Solutions Source: Frost & Sullivan 5
  6. 6. Major Market Restraints Total Firewall Products Market: Market Restraints Ranked in Order of Impact (World), 2010-2016 Customer Lack of Customer Cautious Attitudes Towards Restraint Text Interest Due to Spending Delays Security Level of Innovation Security Dissolution of the Expenditures Network Perimeter Increasing Embedded Competition from Security UTM Solutions Functionality Continues to Improve Source: Frost & Sullivan 6
  7. 7. Economic Downturn Total Firewall Products Market: Unit Shipment and Revenue Forecasts (World), 2006-2016 Revenues ($ Million) Revenue Growth Rate (%) 5,000 12.0 4,500 10.0 Revenue Growth Rate (%) 4,000 Revenues ($ Million) 3,500 8.0 3,000 2,500 6.0 2,000 Mature technology, market 4.0 1,500 saturation, and economic 1,000 pressures cause slowed growth in 2.0 500 2009, before rebounding in 2010. 0 0.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Note: All figures are rounded; the base year is 2009. Source: Frost & Sullivan •In 2009, firewall vendors dealt with unexpected economic pressures as customers delayed replacement and upgrade cycles. •Firewall remains a critical part of any network and security infrastructure, and sales will rebound starting in 2010. 7
  8. 8. Major Challenges Adapt to New Technologies Adapt to Disruptive Maintain Dominance in and Emerging Threats Technologies Enterprise Market •Firewalls are already •Emerging technologies and •SMB customers have been vulnerable to evasion tactics applications present new drawn to consolidated such as port hopping and attack vectors, and security solutions that include tunneling. complicate traditional security firewall (UTM). practices. •The threat landscape •Large enterprise and service continues to evolve. •Customers will often accept providers still require high the risk inherent to using performance solutions. •Firewall vendors must these applications. continue developing new •Firewall solutions are methods of detecting and •Firewall solutions must currently more scalable than preventing attacks and enable customers to safely UTM solutions. unwanted network traffic. use next generation applications. •UTM products continue to improve performance and scalability. 8
  9. 9. Emerging Trends •The firewall market was initially highly innovative, with three different product methodologies developed within a short span of a few years. •Since then, firewall vendors have focused on competing primarily on price and scalability. •Going forward, the primary strategy for many firewall vendors originally focused on convergence to provide value to customers. •However, vendors have released new firewall functionality that will help customers to better address emerging technologies and the new threat landscape. •New and emerging firewall technologies are required to motivate customers to replace or upgrade their existing solutions. 9
  10. 10. Emerging Trends Total Firewall Products Market: Market Timeline (World), 1985-2010 First Generation Second Generation Third Generation Fourth Generation Large vendors Vendors begin Vendors begin to adapt emerging First packet offering Deep consolidate firewall Application technologies filter firewalls layer firewalls Packet security functions developed developed Inspection into firewall 1985 1990 2000 2003 2006 2010 Security breaches Stateful Firewall solutions Proprietary ASICs Firewalls capable demonstrate the firewalls developed now include IPsec used to improve of securing traffic need for perimeter VPN capabilities performance based on defence application and user identification Source: Frost & Sullivan 10
  11. 11. Unified Threat Management (UTM) Market Revenue Projection Total Unified Threat Management Market: Revenue and Unit Shipment Forecasts (World), 2006-2016 Revenues ($ Million) Unit Shipments (Thousand) 8,000 1,200 Unit Shipments (Thousand) 7,000 1,000 Revenues ($ Million) 6,000 800 5,000 4,000 600 3,000 400 2,000 200 1,000 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Note: All figures are rounded; the base year is 2009. Source: Frost & Sullivan •The UTM market grew 20.1 percent and generated revenues of $1,971.8 million in 2009. •This market was characterized by high growth rates before 2009, such as a 32.2 percent growth rate in 2008. •As the market rebounds, growth rates are expected to increase in 2010 and 2011, before leveling off. 11
  12. 12. Total Market Segment Highlights Total Firewall Products Market: Sales Key Highlights by Customer Size (World), 2009 • The total firewall market is valued at $2,949.0 million and was divided among the following market segments in 2009. • The large enterprise market accounted Large Service Enterprise for 51.5 percent of market revenues. Provider 51.5% 34.5% • The service provider market generated 34.5 percent of market revenues. • The small and medium business segment generated 14.0 percent of Small and revenues. Medium Business • The small and medium business 14.0% segment has been decreasing in recent years, due to competing UTM solutions. Note: All figures are rounded; the base year is 2009. Source: Frost & Sullivan 12
  13. 13. Product Performance Comparison Total Unified Threat Management (UTM) Products Market: Product Performance by Vendor (World), 2009 Max. Firewall Throughput Max. IPS Throughput Max. UTM Throughput Company A 20 Gbps 10 Gbps 1.5 Gbps Company B 8 Gbps 3.5 Gbps 2 Gbps Company C 10 Gbps 2 Gbps 1.4 Gbps Company D 10 Gbps 1.1 Gbps 350 Mbps Source: Frost & Sullivan • Dedicated firewall solutions are capable of scaling to 10 Gbps throughput, and will soon be available as 40 Gbps solutions, as carriers and service providers demand it. • UTM solutions address a wider range of threats, as well as blended attacks. They are also much more convenient and can be cost effective. • However, these solutions are not as scalable as stand-alone firewall solutions. This high performance is necessary to penetrate the larger enterprise market. 13
  14. 14. Major Industry Participants 14
  15. 15. Conclusions UTM solutions provide tremendous value by combing firewall/VPN, intrusion prevention/detection, gateway antivirus, antimalware, antispyware, antispam, and Web filtering. A considerable percentage of the SMB market has adopted UTM solutions, resulting in a smaller share of the firewall market for this segment. While UTM vendors claim to be gaining traction in the large enterprise and service provider sector, these organizations will continue to require the high performance of dedicated firewall solutions. New firewall technologies are necessary to keep up with the evolving threat landscape and emerging technologies. New firewall technologies will also reinvigorate customer interest, and help firewall vendors to stay ahead of ever-improving UTM solutions. 15
  16. 16. Next Steps Request a proposal for a Growth Partnership Service to support you and your team to accelerate the growth of your company. ( 1-877-GoFrost (1-877-463-7678) Join us at our annual Growth, Innovation, and Leadership 2009: A Frost & Sullivan Global Congress on Corporate Growth, September 13-16 2009, Hyatt Scottsdale Resort & Spa at Gainey Ranch, Scottsdale, AZ ( Register for the next Chairman’s Series on Growth: The CEO's Growth Partnership: Developing a comprehensive action-based strategy to reinvigorate yourself (Tuesday, July 6) ( Register for Frost & Sullivan’s Growth Opportunity Newsletter and keep abreast of innovative growth opportunities ( 16
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  18. 18. For Additional Information Jake Wengroff Craig Hays Corporate Communications Sales Manager Information & Communications Information & Communications Technologies Technologies (210) 247-3806 (210) 348-6420 Robert Ayoub Industry Manager Network Security (210) 247-3808 18