Emerging Trends in the Network Security Market in India, CY 2013 Advanced Threat Landscape will Give Rise to Increased Network Security Spending 9AC3-74 July 2014
Contents Section Slide Numbers Executive Summary 4 Market Overview 8 Market Highlights, Trends and Forecast 15 Competition Analysis 23 Strategic Recommendations 27 Appendix 30 The Frost & Sullivan Story 32 9AC3-74 3
Executive Summary The Indian network security market achieved a steady year-on-year (YOY) growth of %, with a revenue of INR crore in 2013. Although 2013 was a challenging year because of the economic slowdown and rupee depreciation, the overall demand for network security from enterprises remained robust. The market is expected to continue the growth momentum over the short to medium terms, as enterprises are likely to deploy security solutions due to the growing need for regulatory compliance and address the security challenges arising from upcoming trends such as web 2.0, mobile security, social media, and cloud computing. The use of smart phones, tablet PCs, and other mobile devices is rapidly increasing across organizations in India. The proliferation of consumer-owned smart phones and tablet PCs on the corporate network of organizations has given rise to network security solutions that are designed specifically for bring-yourown-device (BYOD). Networking vendors are aggressively expanding their portfolios to address the consumerization of smartphones and tablets. This trend is likely to continue to grow for another 3-4 years. Additionally, enterprises are becoming increasingly dependent on web/ Internet-based technology for their day to day operations. This trend is also significantly driving the demand for network security products and solutions. The strengthening of partnerships between network security vendors and managed security service providers (MSSPs) is another market trend in India. Security vendors partner with MSSPs and offer security solutions to organizations in the region through the model of outsourcing. This consolidation of partnership between MSSPs and original equipment manufacturers (OEMs) in India is likely to drive the network security market. 9AC3-74 5
Research Objectives, Scope, and Methodology Research Objectives This market insight provides the emerging trends in the Network Security market in India for CY 2013. It analyses the market trends, technology trends, revenue analysis, and competitive scenario. The Network Security market is segmented into Firewall/IPSec VPN, SSL VPN, and Intrusion Detection and Prevention Systems (IDS/IDP/IPS). Research Scope Geographic scope: India Years considered for forecasts: CY 2014 2020 Research Methodology Primary research with OEMs Frost & Sullivan published research services Published news Company Web sites and other secondary sources 9AC3-74 6
Assumptions All revenue is based on end-user prices, which is the actual price paid by end users for the products. All revenue associated with system integration, maintenance, and other professional services attributes have been excluded from this analysis. Revenue is provided in INR, unless specified otherwise. Deployment of integrated security appliances driven by anti-virus and content filtering are excluded from the final revenue. Sales of security subscription services such as anti-virus, content filtering, and IPS with integrated security appliances are excluded from revenue accounting for integrated security appliances under the firewall/ipsec VPN segment. For secure routers/switches deployments, which are driven by security purposes, costs are included for the entire solution, including value of router/switch hardware. Sales of security modules that are not bundled with router/switch sales are accounted for separately. No revenue will account for SSL VPN functionalities, which are offered at no additional charge to customers on firewall appliances or integrated security appliances. 9AC3-74 7
Market Overview Technology Segmentation Network Security Market Firewall/IPSec VPN SSL VPN IDS/IDP/IPS Integrated Security Appliances Secure Router/Switch + Firewall/IPSec VPN Stand-alone Firewall/VPN Appliances Software Firewall/IPSec VPN Network-based IPS on Integrated Security Appliances IPS on Secure Router/Switch Stand-alone IDS/IDP/IPS Appliances Stateful/Deep packet inspection firewall/vpn Desktop firewall Integrated Security Appliances (FW/VPN+IPS but exclude AV and IPS service revenues) VPN Appliances Switch+FW/VPN (Security specific and include standalone sales of security blades) Router+FW/VPN (Security specific and include standalone sales of security blades) Router+FW/VPN (Mainly router with firewall feature set) Software IDS/IDP/IPS Appliances (NIDS/NIPS) Switch+NIDS/NIPS (Security specific and include sales of IDS/IPS blades) Router+NIDS/NIPS (Security specific and include sales of IDS/IPS blades) HIDS/HIPS 9AC3-74 9
Market Overview Definitions Firewall/IPSec VPN Products which include a firewall and/or IPSec VPN on a single platform. A firewall is a system or a group of systems that enforces an access control policy between networks. Access control policy means blocking certain traffic and/or permitting certain traffic. Thus, the principal function of a firewall is to protect resources of a private network. Only stateful or deep packet inspection firewalls are included in this study. VPN is a virtual private communication network existing within a shared or public network platform that is the Internet. VPN uses the shared public infrastructure while maintaining privacy through security procedures and tunneling protocols. IPSec VPNs operate at the network layer (layer three) of the Open System Interconnection (OSI) network architecture model. 9AC3-74 10
Market Overview Definitions (continued) SSL VPN A type of VPN that does not require VPN client software on remote devices. Users can make a secure connection from any laptop or desktop PC with a browser using SSL standard. Intrusion Detection and Prevention (IDS/IDP/IPS) IDS gathers and analyzes information from various areas within a computer or a network by using intelligent detection methods to identify possible security breaches, which include both attacks from outside and inside the organization. IDP or IPS not only detect but also block such attacks. 9AC3-74 11
Key Market Drivers and Restraints Network Security Market: Key Market Drivers and Restraints, India, 2013-2018 Drivers Restraints Major trends such as cloud/mobile computing, along with the integration of telecom, broadcasting, and Internet networks, are expected to drive the overall ICT budget in the market. The security concerns of these major trends are indirectly driving the Indian network security market. The use of smart phones, tablet PCs, and other mobile devices is rapidly increasing across organizations in India. The proliferation of consumer-owned smart phones and tablet PCs on the corporate network of organizations has given rise to network security solutions that are designed specifically for BYOD. Networking vendors are aggressively expanding their portfolios to address the consumerization of smartphones and tablets. This trend is likely to continue to grow for another 2-3 years. The market continued to be under pressure because of the depreciation of the Indian Rupee, and vendors experienced high price pressure to close deals. The partner management in the Indian market is unregulated. Some distributors compete with each other over the same products, while others compete with each other in the same territories. The channel lacks structure in terms of product price, profit potential, and regional allocation. Subsequent to the global economic slowdown, organizations no longer have unrestrained budgets for security. Companies give a lot of consideration to the total cost of security operations before signing any contract. In addition, the Indian network security market is extremely price-sensitive. 9AC3-74 12
A Snapshot of the Network Security Market Percent of Revenue Network Security Market: India, CY 2013 IDP/IDS/IPS % SSL VPN % 100% = INR 1,601.7 Crore Firewall/IPSec VPN % The total Firewall/IPSec VPN segment in India stood at INR crore in 2013 and is expected to show a compound annual growth rate (CAGR) of % over the 2013-2020 period. Next Generation Firewalls have motivated customers to replace or upgrade their existing firewall solutions. These new firewalls offer a full suite of security capabilities, such as IPS gateway, web/email security, anti-virus, content filtering, and anti-spam. The Indian SSL VPN segment was small with an overall revenue share of INR crore in 2013. Customers in India remained apprehensive in terms of understanding the need for the SSL VPN solution, and the high cost associated in adopting this technology. As a result, most enterprises preferred to adopt the feature format of firewalls and unified threat management (UTM) solutions with built-in SSL VPN capabilities. The Indian IDP/IDS/IPS segment continued to achieve significant YOY growth of % in 2013 with a total revenue of INR crore. The demand for IDP/IDS/IPS solutions has grown because of improved awareness of security, the increased popularity of cyber attacks, and growing concerns over security from adoption trends such as BYOD and cloud computing. Note: All figures are rounded. The base year is CY 2013. 9AC3-74 13