Websense: Worldwide Leader in Web Filtering Expands into Web Security

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1 Global Headquarters: 5 Speen Street Framingham, MA USA P F VENDOR PROFILE Websense: Worldwide Leader in Web Filtering Expands into Web Security Brian E. Burke Sponsored by: Websense IN THIS VENDOR PROFILE Web filtering solutions experienced yet another year of healthy growth in With a 25% increase from 2002 to 2003, Web filtering reached $338 million in worldwide software revenue in The demand and interest in Web filtering solutions remains strong with corporate concerns with Web security, employee productivity, legal liability, and network resources on the rise. Web filtering has evolved from addressing a single class of employee distractions access to URLs to more robust, scalable, and flexible filtering solutions that address the complex security needs of a networked business world. Current Web filtering solutions offer more mature architectures and finer-grained categorization, as well as filtering options beyond simple permit and deny. IDC believes organizations will demand more robust, scalable, and flexible filtering solutions to address the complex security needs of a networked business world. As the next generation of Web filtering solutions begins to take shape, employees and employers face an evergrowing set of distractions and challenges beyond nonbusiness-related Web sites. These risks include:! Web security concerns have been heightened, due to the rash of Web-based viruses and malicious mobile code (e.g., NIMDA, Code Red, and Bugbear) that have escaped traditional signature-based antivirus software.! More users rely on protocols such as streaming media, peer-to-peer (P2P), and instant messaging.! Spyware is no longer just a consumer nuisance; it is quickly becoming a major security and productivity concern in the corporate environment.! The growing number of "phishing attacks" has opened corporate eyes to the threat spyware poses to information security. Spyware has been known to target employees and trick them into providing corporate passwords.! Employees installing commercially available software, rogue malware, unlicensed software, and freeware/shareware is another growing concern. Filing Information: October 2004, IDC #4284, Volume: 1, Tab: Markets Security Products: Excerpt

2 SITUATION OVERVIEW Web filtering is a widely adopted solution that allows for the better management of both employee time and network resources by automating enforcement of an organization's written Internet access policy. These solutions have been adopted by organizations of all sizes, as shown in Figure 1. FIGURE 1 Web Filtering/Blocking Adoption by Company Size 70% 60% 50% 40% 64.9% 60.7% 51.7% 42.0% 52.3% (%) 30% 20% 10% 0% 10,000+ 1,000-9, Less than 100 Total N = 606 Market Size and Forecast In 2003 the Worldwide Web filtering software market reached $328 million (see Table 1). IDC believes the Web filtering software will grow from $338 million in 2003 to $935 million in 2008, representing a compound annual growth rate of 23%. 2 # IDC

3 TABLE 1 Worldwide Web Filtering Software Revenue, ($M) CAGR (%) Web filtering software $337.8 $420.6 $521.8 $645.4 $786.4 $ % Growth 24.5% 24.1% 23.7% 21.8% 18.8% Websense: Leading the Web Filtering Software Market in 2003 Websense was the market leader in Web filtering software in As the largest Web filtering software vendor, Websense accounted for a 24.2% market share and $82 million in revenue, as shown in Figure 2. Websense is not only the largest Web filtering vendor in terms of revenue, it is also one of the fastest growing, as shown in Figure 3. From 2002 to 2003, Websense increased revenue 34% in the Web filtering market. It is important to note that Websense sells subscriptions to its products primarily on a one-, two-, or three-year basis, billing the entire amount to the customer upfront and booking the full value of the contract to deferred revenue on their balance sheet. As a result, customer billings, which represent business generated in the current quarter, provide an additional measure of Websense's performance in the current period. For the fiscal year, billings were $111 million, an increase of 35% from IDC #4284 3

4 FIGURE 2 Worldwide Web Filtering Software Revenue by Vendor, 2003 Market Share Websense (24.2%) Other (38.9%) Webwasher (2.9%) Symantec Corp. (6.4%) Secure Computing Corp. (9.2%) SurfControl, Inc. (18.5%) 4 # IDC

5 FIGURE 3 Worldwide Web Filtering Software Revenue Growth Rates for Top 5 Vendors ($M) Websense 2003 Web Filtering Software Revenue SurfControl, Inc. Secure Computing Corp. Symantec Corp. 10 Webwasher 0 0% 10% 20% 30% 40% 50% Revenue Growth Rate (%) Websense Profile Strategic Direction Websense Enterprise, the world's leading employee Internet management solution, enhances security, improves employee productivity, reduces legal liability, and optimizes IT resources. The latest version of Websense Enterprise v5.5, which became available in October 2004, is built upon the company's strengths of content classification, Web filtering, and Web security. Unlike traditional Web filtering solutions that manage employee Web use at the Internet gateway only and focus primarily on managing employee access to URLs, Websense manages employee use of computing resources at the gateway, network, and desktop levels. Websense is tightly integrated with the leading Internet infrastructure providers, including Cisco, Checkpoint, Nokia, and Microsoft. Websense v5.5 provides many new features, including Websense Real-Time Security Updates. This new capability enables Websense Enterprise Security PG and Client 2004 IDC #4284 5

6 Policy Manager (CPM) to retrieve database updates for critical security-related events in real time when new threats are added to the Websense database. Realtime security updates provide immediate updates to security-related threats as soon as they are identified by Websense, providing organizations with immediate protection while limiting any potential damage. Websense Products! Websense Enterprise manages employee Web use at three network control points: the gateway, network, and desktop. Websense Enterprise enables management across Web pages, network protocols, and desktop applications to effectively combat growing security, legal, and productivity threats that infiltrate company networks, such as peer-to-peer file sharing, IM, hacking tools, and spyware.! Websense Security Premium Group (Security PG) scans its URL database of millions of sites for malicious code, including ActiveX controls, Visual Basic script, JavaScript, and Java Applets. Then, using sophisticated algorithms, Websense categorizes those sites infected with MMC and blocks employee access to them. Security PG helps organizations manage employee risks with malicious mobile code, spyware, phishing, and other frauds.! Websense Client Policy Manager (CPM) delivers zero-day protection against unknown security threats, including today's sophisticated malware, and provides a proactive critical component that complements existing desktop security solutions by preventing the execution of unauthorized applications, such as spyware, peer-to-peer file sharing, and employee hacking tools, while enabling flexible policy management of applications, such as instant messaging or remote control tools. Utilizing a unique application database with over 50 categories, CPM enforces flexible use policies for corporate desktops, mobile laptops, and servers.! Productivity PG increases employee productivity by controlling access to many of the most popular cyber-slacking categories, such as online advertisements, IM, freeware, and pay-to-surf.! Bandwidth PG improves network performance by reducing access to bandwidth-intensive downloads. Filter for sites that provide streaming media, Internet radio and TV, and P2P file sharing, among others.! Bandwidth Optimizer improves overall network performance by reducing the use of nonwork-related, high-bandwidth media based on real-time network conditions.! IM Attachment Manager is an add-on module that enables IT managers to manage the sending and receiving of files via IM clients. This module mitigates the security and legal risks posed by the unmanaged use of IM attachments, and it helps optimize IT resource allocation and employee productivity. 6 # IDC

7 Overview Websense was founded in 1994 and protects more than 18 million seats. Headquartered in San Diego, California, with offices in China, Japan, Australia, and across Europe, Websense employs approximately 425 people worldwide. Challenges The Websense solution provides a comprehensive approach to addressing today's Web security threat environment. The challenges of expanding Web filtering beyond the browser to a more complete Web security solution that addresses viruses, worms, and malicious code may mirror many of the same challenges in the initial stages of Web filtering. These issues may include limited IT budgets, and compatibility issues related to how these new solutions fit into existing corporate security frameworks.. Enterprises are currently facing a growing number of risks associated with the Web. The good news is that Web security business values can be easily explained to corporate executives, department managers, and IT staff alike. Protection from legal liability, increased productivity, maximized IT resources, and enhanced protection from viruses and malicious code are all demonstrable benefits. Copyright Notice This IDC research document was published as part of an IDC continuous intelligence service, providing written research, analyst interactions, telebriefings, and conferences. Visit to learn more about IDC subscription and consulting services. To view a list of IDC offices worldwide, visit Please contact the IDC Hotline at , ext (or ) or sales@idc.com for information on applying the price of this document toward the purchase of an IDC service or for information on additional copies or Web rights. Copyright 2004 IDC. Reproduction is forbidden unless authorized. All rights reserved IDC #4284 7