The arrival of behemoths like Cisco
Systems (CSCO) into the Internet firewall market could threaten smaller software players in that niche, a new study from International Data Corporation warns.
"Cisco represents the first entrant from one of three potential camps of 'barbarians,' or vendors from outside the firewall market, that could wreak havoc in the firewall business,"
states the report, Worldwide Firewall Market: 1996-2001, authored by analyst Ted Julian.
Other potential new competitors include network operating systems vendors, management software makers, and hardware manufacturers.
Two recent developments underscore the trend of bigger players getting involved. Cisco recently paid $40 million for low-end firewall software from Global Internet.Com to
round out Cisco's line.
And Microsoft (MSFT) has hinted that it will build more firewall features into the 2.0 version of its Proxy Server, which goes into beta this month.
In response, firewall vendors Trusted
Information Systems (TISX) and Network-1 Software and
Technology have announced alliances with Microsoft.
Cisco entered the firewall business last year and quickly grabbed the second-largest market share, 8 percent, behind Check Point Software Technologies (CHKPF), which holds a commanding 35 percent market share.
Tied with Cisco for second place at 8 percent is Trusted Information Systems (TISX).
Fourth in market share was Raptor
Systems (RAPT) with 7 percent, followed by Secure Computing (SCUR) at 5 percent, IBM (IBM) with 3 percent, and the remaining 34 percent split among various other companies.
In other findings on the firewall market in 1996, IDC reported that:
36,610 units were sold, a jump of 266 percent over 1995. It predicts 1.12 million firewalls will be sold in the year 2001. However, IDC expects the growth rate to slow over the next five years.
Prices for firewall software fell dramatically, from an average of $16,000 in 1995 to $6,000 in 1996. Competition was one factor, but several vendors stopped bundling firewall software with a PC or workstation last year, leading to the decline. By the year 2000, IDC expects the average price to stabilize
1996 firewall revenues reached $220 million, up
about 37 percent from 1995.
Most firewalls were sold in the United States, but the U.S. portion of the market will decline from a high of 68 percent in 1996 to 38 percent in 2001. At 15 percent of units shipped, Western Europe was the second largest sector last year, followed by the Asia-Pacific region at 8 percent, Japan at 4 percent, and the rest of world at 5 percent.