Apac network security market remains resilient: Frost

MALAYSIA: The Asia-Pacific network security market is likely to grow by 6.5 percent in 2009, dropping nearly two-thirds from the robust growth in 2008.

Last year was perhaps too soon for the Asia-Pac region to feel the full brunt of the financial meltdown, the final quarter however -- typically the strongest quarter -- was a tell-tale of what to expect in 2009, growing a dismal 1.5 percent over Q3-2008.

According to Frost & Sullivan industry manager Arun Chandrasekaran, however, despite the weak sentiments and businesses exercising caution in spending, the commitment to network security investments remains strong. “Most companies recognise that the risks of not implementing adequate IT security far outweigh the cost of investing in it,” he says.

"Amidst pressure to control CAPEX (capital expenditure) and stretch every dollar, companies are more likely to deploy the more affordable converged security solutions," Chandrasekaran adds. "Adoption of managed security services is also expected to rise as companies try to minimise outright purchases."

New analysis from Frost & Sullivan Asia-Pacific Network Security Market, finds that the market -- covering 14 Asia-Pacific countries -- was worth an estimated $1.81 billion in 2008, growing 17.9 percent from the year before. A modest CAGR of 7.5 percent is expected from 2009 to 2015, to gross revenues of just over $3 billion by end-2015.

The growth in 2008 continued to come from the epicentres of emerging markets like China, India, as well as ASEAN countries like Vietnam and Indonesia, all registering year-on-year growth rates of above 20 percent.

Firewall and IPSec VPN solutions continued to be the dominant choice, accounting for the bulk of revenues last year at 74.6 percent ($1.34 billion). This trend is likely to continue through to 2015.

The SMB segment contributed slightly more than one-third to the total revenues in 2008. Chandrasekaran expects this percentage to rise over the next few years. "More and more SMBs are beginning to install at least first-layer perimeter defence on their corporate networks as converged or integrated security appliances have made
network security affordable for smaller businesses." By 2015, SMBs will
account for approximately 45 percent of the revenues.

Despite being one of the hardest hit, the BFSI (banking, financial services and insurance) sector remains the leading adopter of network security solutions at 20.8 percent ($377 million) of revenues in 2008, followed closely by service providers and the government sector at 18.4 percent ($333 million) each.

Chandrasekaran believes that the banking sector will continue to be the biggest spender on network security moving forward, mainly due to rising regulatory compliance. Moreover, he says, "Following the loss of public confidence in the banking system after the financial debacle of September 2008, the last thing any CIO would want is a security breach to further dent the confidence of existing and potential customers."