Network Security & UTM
The appliances market comprising of network security and UTM appliances grew 25% as revenues moved up from Rs 452 crore in FY 07 to Rs 566 crore in FY 08. It was the lowest growth segment in the overall product landscape because of the fact that this market already stands on a high base. As a result, the incremental growth doesnt seem too high. However, this was a significant jump in the growth rate compared to last years 9%. From the vendor perspective, there was specific focus on strengthening the channel network in order to reach out more effectively to new customers in the tier-2 and -3 cities.

The broad drivers for growth were infrastructure build-out, regulatory compliance, and a growing awareness of the emerging security threats. Apart from new infrastructure deployment there were also a lot of hardware refreshes in head offices and data centers, for the large enterprises. At the branch office level, there were new product purchases in the areas of IDS/IPS as well as SSL VPN to connect the growing number of remote users.

Even while large enterprises continued to be the mainstay market for network security contributing significantly to overall spending, there was a significant shift toward SMBs. Due to the adoption of high-end security appliances (standalone products and SSL VPN and IDS/IPS products) at the head offices and regional offices, the large enterprises are expected to contributor the most in the forecast period. As per Frost & Sullivan, SMB spending grew over 60% in FY 08 as compared to the previous year. The contribution from large enterprises is expected to decrease in the future with the SMB market gaining prominence. The SMB market got the necessary push from the integrated security appliances or UTM.

BFSI and service providers emerged as the top spenders on network security, followed by IT/BPO, government, and manufacturing. According to Frost & Sullivan, within BFSI specifically, there was a spike in spending from insurance companies with both the private and government insurance companies active on security spending during the year. The tier-2 insurance companies invested in perimeter security products in FY 08 as they initiated their IT roll-outs. The governments SWAN projects also demanded security and reliability.

Firewall/IPSec VPN comprised the bulk of the Indian network security market at 75% share in terms of revenues, followed by IDS/IPS at 17% and SSL VPN at 8% share.

During FY 08 there was more convergence with network infrastructure vendors embedding security features in their products. Several networking vendors are expected to launch converged security solutions in year 2008 and beyond. The integrated appliances, by combining multiple security technologies on the same platform, have been quite successful in catering to the Firewall/IPSec VPN market. These two vendor categories enjoyed the majority share of the firewall market. Network infrastructure vendors also continued to bundle security in their routers and switches. Correspondingly, the sale of stand-alone Firewall/IPSec VPN appliances declined and adoption was limited to the high-end market.

The rise of behavior-based threats when compared with signature-based threats and proliferation of branch offices resulted in increased number of remote users demanding secured networks. This created demand for IDS/IPS and SSL VPN technologies in the Indian market.

Source: Frost & Sullivan

SSL VPN has been gradually replacing IPSec VPN, particularly for remote access. The demand came from verticals where there was a significant movement towards mobile workforce as well as the need for connecting to global partners, suppliers and customers. The industry consolidation continued to reduce the number of independent/pure-play vendors focusing exclusively on SSL VPN technology.

Large enterprises dominated the adoption of IDS/IPS technologies on a standalone basis. The bundling of IPS onto integrated appliances is expected to create a pressure on standalone IPS solutions as these bundled

IPS services are offered at competitive pricing. This impacts the potential opportunities for sale of standalone IPS solutions to the lower end of medium enterprises.

The UTM Game
UTM appliances, combining firewall, antivirus, and intrusion detection and prevention capabilities into one offering, touched Rs 104 crore, up from Rs 68 crore in FY 07. Growing at 53%, it was more skewed toward large enterprises, more specifically for deployment at the branch level.

While first-generation UTM devices saw deployment in mid-size businesses. The latest generation offerings are more robust than their previous generation counterparts. UTM vendors have started targeting mainstream enterprise adoption. However, when it comes to the demand side, large enterprises are still wary of UTM deployments on a large scale.

Vendors did their bit by trying to increase the robustness of their UTM devices with the introduction of higher-end features. Leading vendors have introduced high throughput UTM models. UTM is rapidly changing from its basic definition of Firewall, Gateway AV IPS and VPN to many more features such as content filtering, multi ISP load sharing, anti-spam, traffic management, VLAN support and SSL VPN.

Emerging trends comprise enabling administrators to prevent users from visiting certain websites, secure social networking applications, and roll out of secure socket layer virtual private network (SSL/VPN) connections to remote sites. Other features include centralized management system, facilitating greater control of the network as a whole, database security, etc.

There was also increased adoption of managed UTM solutions both under the CPE model as well as the network model mainly placed in the service provider cloud. The trend of router consolidation into UTM devices also brought about prominent shift in customer buying patterns eliminating the need for purchasing and managing separate routing devices. This led to reduced TCOs. Fortinet, CheckPoint, Cisco, Juniper, SonicWall and Cyberoam emerged as the prominent vendors on the UTM scene.

The Software Gambit
As per IDC, for a long time the security software products market was dominated by anti-virus, and it is only recently that the market has moved beyond anti-virus and investments in other security software like security and vulnerability management, identity and access management, etc, have picked up. The software part of the product story comprises SCM and the 3A software market. The SCM market emerged as the highest growth segment among products with 40% growth. Within SCM, anti-virus brings the major chunk of revenues, though the incremental growth came from relatively newer segments like anti-spam, Web content filtering, email filtering, data leakage prevention, etc. The 3A software market comprised identity and access management, vulnerability assessment management, NAC, web-based single sign-on, etc.

Major vendors in the security software landscape include Trend Micro, Symantec, McAfee, Websense, SonicWall, CheckPoint, Microsoft, RSA Security, etc.

Anti-virus being the biggest chunk was also the fiercest in terms of competition. The anti-virus market, especially in the consumer segment, became more or less commoditized. In FY 08, the big anti-virus vendors faced stiff competition from smaller vendors, both local and global. Specific vendors that made their presence felt during the year were Quickheal Antivirus and KasperSky. In fact, Quickhealwas was quite active in creating awareness about the brand.

DLP is one of the most exciting areas when it comes to vendor activity, and hence was a key focus for vendors. Not wanting to lose the early movers advantage, vendors have been adding the DLP technology into their portfolio through organic or inorganic routes. There have also been acquisitions by vendors in IDM to further strengthen their portfolio against emerging threats.

Security Services
While threats are becoming increasingly sophisticated and the IT infrastructure more complex, there is a lack of in-house expertise and an added pressure to adhere to regulatory compliance. There has also been network refresh due to technology migration to support growth and addition of new applications. This forced organizations to look at service providers to outsource their security operations to. Growth in adoption of specialized security technologies also resulted in an increased outsourcing trend to manage advanced technologies.

The security services market has shown a definitive shift in addressing Web-based intrusions and attacks, primarily related to the financial sector. CERT-In statistics for 2007 show that almost 6,000 websites were defaced during the year, prompting an increase in Web application security audit services. The other major highlight has been the increase in managed security services, which is one of the fastest-growing segments in the security marketplace. Even banks and financial institutions initiated projects for outsourcing security operations in FY 08.

Some prominent services that service providers are offering in the Indian market include security management (penetration testing, patch and vulnerability management), compliance monitoring (incident and event management), IT risk assessments (systems and applications), PKI and data protection services, security consulting services (enterprise security services, information assurance, compliance, BCP/DR services), implementation, integration and ongoing support services for network security solutions including firewall/VPN/IDS/IPS/Web content security/anti virus/anti-spam, etc. Among services that are coming up and finding their into enterprises are PCI DSS scanning, Web application security audits and shared security services-vulnerability assessments, and penetration testing.

Shipra Malhotra
shipram@cybermedia.co.in

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