Security software market poised for growth

Gordon Peters
Thursday, 19 August 2010 02:05

IT Industry - Market

Gartner has predicted that worldwide security software revenue will surpass US$16.5 billion this year, to record an 11.3 percent increase from 2009 revenues of US$14.8 billion.

According to Gartner, although the economic downturn slowed security revenue to seven percent growth in 2009, organisations have indicated an intention to give priority to security budgets.

Gartner's, principal research analyst Ruggero Contu, forecast that most segments of the security software market will continue to grow over the next few years, although, 'a significant degree of variation is expected between the more-established and less-mature technologies," adding that "overall, security will remain one of the fastest-growing areas within the enterprise software market."

Gartner analysts said security software markets weathered the economic downturn better than in 2001 and 2002, because the market conditions are dramatically different in terms of maturity, penetration, confidence in IT, and geographic and vertical mix.

"Security software vendors that have a balanced mix of channel, new license and maintenance revenue streams and flexibility in contractual terms, such as software as a service (SaaS), open source and outsourcing, have the strongest options for continued growth and to even out the risk," Contu said.

"Shrinking discretionary spending budgets have heightened competition for new maintenance and license revenue streams and placed a renewed emphasis on vendor performance and viability."

And, Gartner reports that the consumer security software market remains the largest security software segment, with 2010 revenue projected to reach US$4.2 billion in 2010, up from US$3.9 billion in 2009. The research firm also says that the endpoint protection platform (enterprise) market is the No. 2 security software segment, with revenue on pace to reach US$3 billion in 2010, up from US$2.9 billion in 2009.

According to Gartner, the security software market continues to benefit from prioritisation and demands related to compliance requirements, as well as the need to keep up with ever-increasing sophistication and volume in the threat landscape.

'During the next six to 12 months, products delivered as SaaS and appliances will continue overtaking traditional software licensing as the preferred purchasing methods,' said Matthew Cheung, senior research analyst at Gartner.

'Delivery as a suite in subsegments such as enterprise endpoint security, identity and access management (IAM), and Web security will be the most prevalent product delivery types. Despite major vendors seeking to consolidate, opportunities exist for smaller niche players and product specialisation, and local expertise is expected to remain a valued factor.'

In the Asia Pacific region, Gartner forecasts that security software revenue will reach US$1.52 billion in 2010, up 20.6 percent over 2009. The report says that Asia Pacific (excluding Japan) was not as affected by the economic crisis in 2008, and organisations in Asia/Pacific have started to invest in software 'with a stronger emphasis on accommodating potential growth and meeting pent-up demand, in contrast with their dominant focus on cost reduction and efficiency enhancements in the previous year.'

Key countries China and India are expecting higher growth, Gartner says, adding that government stimulus spending is winding down, 'which may slow domestic market demand in these two countries for 2011.'

Mature markets, Australia and Singapore also have a 'positive outlook in 2011 because these countries' revenue is supported by a consistent maintenance revenue stream, strong vendor channel and strong service infrastructure.'