Security Appliance Market Growth Continues to Slow in Third Quarter of 2012, According to IDC

FRAMINGHAM, Mass.--(BUSINESS WIRE)--According to the International Data Corporation (IDC) Worldwide Quarterly Security Appliance Tracker, both factory revenue and unit shipments grew in the third quarter of 2012 (3Q12) compared to the previous year. Worldwide factory revenue was up 5.7% year over year to just over $2.0 billion, as shipments increased 1.0% to 499,022 units. In the previous quarter, factory revenue growth was 6.6% and unit growth was 5.8% compared to the second quarter of 2011.

“Overall, macroeconomic conditions have been questionable at best. While the security market remains more resilient than others, there was a definite slow-down in growth rates in the third quarter”

Geographically, revenue grew fastest in Asia/Pacific (excluding Japan) with a 13.3% year-over-year increase. Western Europe continued to see sluggish growth, increasing just 0.5% year over year. Japan had the highest unit growth year over year of 8.3%, followed closely by combined Central and Eastern Europe and Middle East, and Africa at 7.9%. The United States recorded 4.6% revenue growth on a unit decrease of 1.2% versus 3Q11, indicating some softness in lower price bands and that revenue growth was driven by larger enterprises and service providers.

"Overall, macroeconomic conditions have been questionable at best. While the security market remains more resilient than others, there was a definite slow-down in growth rates in the third quarter," said John Grady, research manager, Security Products at IDC. "That being said, the evolving threat landscape continues to drive spending on security products as organizations battle to keep their infrastructures secure and their data protected."

The combined shares of the top 5 global vendors represented 48.5% of the market in 3Q12. Cisco continues to lead the overall security appliance market with 16.2% share in factory revenue for the third quarter, but this was down from 17.3% in the prior year period. Check Point held the number 2 spot with 12.8% share for the quarter as revenue increased 12.8% compared to the third quarter of 2011. Fortinet saw the largest growth among the top five vendors at 17.2%. The share of Others increased primarily due to strong quarters from Palo Alto Networks and Sourcefire.

Top 5 Vendors, Worldwide Security Appliance Revenue, Third Quarter of 2012
(revenues in $ millions)
Vendor	3Q12 Revenue	3Q12 Share	3Q11 Revenue	3Q11 Share	3Q12/3Q11 Growth
1. Cisco	$326	16.2%	$331	17.3%	-1.5%
2. Check Point	$258	12.8%	$229	12.0%	12.8%
3. Juniper	$160	7.9%	$171	9.0%	-6.4%
4. Fortinet	$120	5.9%	$102	5.4%	17.2%
5. McAfee	$116	5.7%	$110	5.7%	5.3%
Others	$1,039	51.5%	$967	50.6%	7.4%
Total	$2,019	100%	$1,910	100%	5.7%
Source: IDC Worldwide Quarterly Security Appliance Tracker, December 19, 2012

Functional Market Results

At the functional market level, the Unified Threat Management (UTM) segment saw the largest year-over-year revenue growth at 24.3% and accounted for 33.3% of security appliance revenues in 3Q12, as multi-function appliances continue to drive growth in the overall market. The Firewall/VPN market represented 26.7% of security appliance revenues thanks to 7.3% year-over-year growth due primarily to Cisco and Juniper. The IPS and VPN segments were the only markets to show revenue declines compared to 3Q11.

"The shift in network security for continuous security processes in detecting threats that other solutions miss is leading the move for unified security management for protection against advanced threats, modern malware, and data theft," said Ebenezer Obeng-Nyarkoh, senior research analyst, Worldwide Trackers Group.

IDC's Worldwide Quarterly Security Appliance Tracker is a quantitative tool for analyzing the global security market on a quarterly basis and is available on demand. The Tracker includes quarterly shipments and revenues (both customer and factory), segmented by vendor, family, model, region, operating system, price band, and security functions.

About IDC

International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community to make fact-based decisions on technology purchases and business strategy. More than 1,000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. For more than 48 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com.

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