Security SellsÂ

If there was one business which proved to be ‘recession-resistant’ last
year, it was the security business. So while everybody else was complaining of
shrinking margins, dropping sales and cut-throat competition, guys in the
anti-virus and security business had only pleasant memories to look back at.

First there were the Nimda and Code Red virus menace and then the 9/11
catastrophe. Add to it the evolution of blended threats (of which Nimda and Code
Red were examples) in a big way and one can see why the security business in
India never had it so good so far.

Companies which really cashed on the situation by offering products and
services for security vulnerabilities were Symantec, Computer Associates,
Network Associates and Trend Micro.

These companies not only strengthened their presence in the Indian market
last year but also recorded growth which was quite unheard of in other segments.
This growth was further complemented by the fact that nearly 70 percent of the
Indian corporates still do not have a well-defined security policy, according to
KPMG figures.

Security solutions and box products did brisk busines
Strengths
	Evolving from ‘perimeter defense’ to ‘integrated’ solutionÂ
	Building up protection mechanism against blended/hybrid threats
	Gearing up to handle threats spreading across a wireless environment

FIREWALLS STILL RULE

Talking of different product categories in the security space, anti-virus
and firewalls were the unquestionable star products in terms of volume as well
as value sale. This was primarily driven by the fact that Indian enterprises
were in a reactive mode as far as e-security was concerned.

Says Vaidyanathan Iyer, National Manager, Security Solutions, CA, "Most
Indian organizations are still in a reactive mode when its comes to e-security
and have only addressed the first part, which is building up their perimeter
defense." Vaidyanathan believes that this is the reason why perimeter
security solutions like anti-virus and firewalls still occupy top-of-mind recall
as far as security is concerned and make up the majority of the market.

CA had a big hit with its eTrust brand of security offerings while Symantec’s
Norton anti-virus continued to remain as popular as ever. Says Vaidyanathan,
"We have seen a very steady growth in the market for anti-virus solutions
notwithstanding the present gloomy environment."

Even Network Associates’ McAfee and content scanning software achieved
wider acceptability in the home as well as enterprise segment. NA’s Sniffer
range of products also sold quite well, especially in the government segment,
informs Vishwajeet Deshmukh, Country Manager-SAARC, Network Associates.

For Trend Micro, InterScan VirusWall–which offers virus protection to
Internet gateways–witnessed a surge in demand. ScanMail was another of its
product which gained popularity amongst Outlook Express and Lotus Notes users.

Offering reason for good sales of stand-alone products like these, Joy Ghosh,
Country Manager, Symantec says, "An average Indian user, be he from home or
enterprise segment, still considers viruses as the most dangerous form of
security hazard. Unfortunately, majority of them believe that a mere anti-virus
or firewall solution is good enough to provide them the required
protection."

Joy believes that the sales of such piece-meal solution will continue to
grow. But at the same time he is confident that with blended threats becoming
more prominent, the increased awareness about such threats will also drive the
demand for integrated security solutions in the days to come.

INTEGRATED SOLUTIONS

The year gone by was a very significant one for the security business
because box products were not the only thing that were in demand. The market
witnessed a gradual increase in awareness and subsequent demand for
comprehensive and integrated security solutions.

So, while anti-virus suites and firewalls continued to sell in larger
volumes, corporates were also asking for solutions that would go beyond
providing just perimeter defense against anti-viruses and firewalls.

Leading vendors tried to go a step ahead of each other by offering various
kind of end-to-end security solutions. The significant feature of such products
was that instead of offering a single-layer, they provided blanket kind of
security–a multi-point protection.

And the most important element driving the demand for such solutions has been
the increasing Internet penetration with more and more businesses getting
e-enabled.

BUSINESS DRIVERS

Segments which primarily brought in good business for security products were
finance and telecom. Other verticals also adopted more and more solutions, but
at a much tepid rate. "Businesses which were mission-critical and involved
transactions were the first ones to go for a comprehensive security
solution," says Joy.

He adds that with more and more data centers coming into existence and
business increasingly getting online, the market will see an increased maturity
for adopting security products. The government sector which so far was
considered to be the slowest adopter of IT is also waking up to the realization
of imminent security hazards lying in the future. Anti-virus companies reported
good business from the government sector as well, even though it was only for
the very basic kind of products.

SME is another segment where all these companies have started increasing
their focus. "We are looking at extending our leadership to the SME
segment, with a special product-price package and a comprehensive channel
strategy," says Ajit Pillai, Country Manager, Trend Micro.

GROWING HAPPILY

Growth it seemed was never an issue with the security companies as it came
naturally and with good figures. So while NA had a modest 40 percent growth,
Symantec claims to have grown by 80 percent. Trend Micro, which started its
Indian operations only early last year, recorded a whopping 150 percent growth.
CA too achieved a very healthy growth during last fiscal.

For the current fiscal, these companies are more than confident of bettering
their growth figures. "We have targeted a 100 percent growth this year for
our Indian business," says Joy. Ajit says that Trend Micro will record
about 250 percent growth for the current fiscal.

CA also intends to make better inroads into the segments that it is already
in. According to Vaidyanathan, the Indian market is still in its nascent stage
and he believes that solutions that are directed at ‘defense against Internet
threats’ will have tremendous market potential in India where enterprises are
slowly accepting the concept of e-business as a part of life now.

What all of this essentially means is that the days ahead for security
business are only sunnier. And with channels being an inherent part of this
business, partners have equally good reasons to smile about as this is one
business which still affords handsome margins and good value propositions.