Sales leap for corporate security appliances

Sales of high-end security appliances have surged in the third quarter of 2003, as enterprises install them in their main networks, having seen lower-end devices prove themselves in branch offices, according to the latest figures from analyst firm IDC.

Companies are also waking up to the fact that security appliances can be much easier to manage than software.

Some 20 percent of these appliances cost more than $25,000, compared with just 10 percent in the second quarter, according to IDC's figures.

"Until now, we have been saying (security appliances) are perfect for small enterprises and branch offices," said Carla Arend, research analyst for European security products and strategies at IDC. "But now for the first time, we are seeing them increasingly sold to large enterprises."

There are several reasons, Arend said: reduced complexity, lower installation costs, easier management, easier troubleshooting and lower cost of ownership, compared with buying software alone.

"It is easier to select products when you're dealing with appliances," said Arend, especially when "people are used to buying networking hardware already. It is also easier to integrate many appliances, and there is some very good support for appliances in the channel. As enterprises have tested them in branch offices, they now trust them in the core network of their main offices. There are hardly any installation costs, and they are very rapid to deploy."

Cisco Systems and NetScreen Technologies continue to dominate the market

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for security appliances, said IDC, and both companies have seen revenue growth of more than 20 percent compared with the same period last year. Of the big players, Nokia has fared the worst, losing market share both in terms of units and revenue. While it is now in second place for revenue, with 15.1 percent of the market, it comes fifth in unit shipments, with only 6.8 percent of the market, behind Cisco (27.7 percent), NetScreen (20.8 percent), SonicWall (13.2 percent), and WatchGuard Technologies (12.1 percent).

Western Europe now accounts for a quarter of security appliance sales, with 43,303 units generating $97.2 million worth of shipments during the quarter. The market grew 22 percent in the third quarter of 2003 against the third quarter of 2002.

ZDNet UK's Matt Loney reported from London.