Security Appliance Market Sees Double-Digit Shipment Growth in 4Q’14
FRAMINGHAM, Mass.–According to the International Data Corporation (IDC) Worldwide Quarterly Security Appliance Tracker, both factory revenue and unit shipments continued to grow in the fourth quarter of 2014 (4Q14). Worldwide vendor revenue grew 8.6% year over year to $2.6 billion in the fourth quarter, the 21st consecutive quarter of revenue growth. Shipments grew nearly twice as fast as revenue at 16.7% year over year to 635,933 units, making 4Q14 the fourth consecutive quarter of shipment growth. For the full year 2014, revenue and shipments improved 8.4% and 8.3% respectively to $9.4 billion and 2.1 million units.
In spite of this, many companies still have not done enough to protect their systems, which could compromise their security and jeopardize sensitive data and information.
Security appliance revenue in the United States surpassed $1.0 billion in 4Q14, growing 13.5% year over year and making it the third fastest growing region after Latin America and Asia/Pacific (excluding Japan). The US accounted for 39.4% of total worldwide revenue in the quarter, gaining 1.7 points of share year over year but losing 2.0 points compared to the previous quarter.
Latin America recorded the strongest year-over-year revenue growth in 4Q14 at 21.5% while shipment growth was 16.4% in the quarter. The region continues to show strong growth potential with just 4.7% share of total worldwide revenue, up half a point year over year, and 5.6% share of total worldwide shipments.
Asia/Pacific (excluding Japan) captured 22.7% of total worldwide revenue in 4Q14 and 23.4% of total worldwide shipments and gained significant shares both year over year and sequentially following a strong performance by Huawei in China. Shipments in the region surpassed 100,000 units in the fourth quarter and grew almost twice as fast as revenue at 32.1% year over year.
The Europe, Middle East & Africa region ended the fourth quarter with a 26.9% share of total worldwide revenue, a loss of 2.3 share points year over year and 1.0 point compared to the third quarter. Unit shipments were up 9.8% year over year, driven largely by demand in the emerging markets in Central & Eastern Europe and the Middle East & Africa.
Japan and Canada combined accounted for 6.2% of total worldwide revenue in 4Q14. The two markets experienced year-over-year revenue declines of -20.4% and -0.4% respectively.
“2014 saw a record number of serious data breaches causing both government agencies and companies to realize how susceptible they are to cyber threats that cut beyond boundaries,” said Ebenezer Obeng-Nyarkoh, Senior Research Analyst, Worldwide Trackers Group. “In spite of this, many companies still have not done enough to protect their systems, which could compromise their security and jeopardize sensitive data and information.”
Cisco continues to lead the overall security appliance market with a 16.6% share of worldwide revenue in 4Q14. This was the first time since the fourth quarter of 2014 that Cisco failed to achieve double-digit year-over-year growth in a quarter.
Check Point remained the number 2 security appliance vendor with 13.2% revenue share in the quarter, gaining 1.2 share points year over year. In addition to 14.4% year-over-year revenue growth, Check Point posted impressive shipment growth of 25.6% in the fourth quarter.
Fortinet returned to the number 3 position with year-over-year revenue growth of 27.4% and capturing 7.7% of worldwide revenues. Fortinet remains the largest security appliance vendor in terms of shipments with 18.8% share of total unit shipments in 4Q14, driven by its Unified Threat Management solution.
Since entering the top 5 in the second half of 2013, Palo Alto Networks has experienced the fastest year-over-year revenue growth, consistently outpacing the overall market. Palo Alto Networks ended the fourth quarter with year-over-year revenue growth of 53.3% and a 7.6% share of worldwide revenues.
Rounding out the top 5 vendors, Blue Coat and McAfee finished the quarter in a tie* with each vendor holding a 4.3% share of worldwide revenues. Both vendors experienced declining revenue share on a year over year and sequential basis.
Top 5 Vendors, Worldwide Security Appliance Revenue, Fourth Quarter of 2014
(revenues in US$ millions)
1. Cisco $435 16.6% $434 18.0% 0.2% 2. Check Point $347 13.2% $303 12.5% 14.4% 3. Fortinet $201 7.7% $158 6.5% 27.4% 4. Palo Alto Networks $199 7.6% $130 5.4% 53.3%
5. Blue Coat*
$113 4.3% $112 4.6% 1.1% 5. McAfee* $112 4.3% $127 5.3% -12.4% Others $1,217 46.4% $1,152 47.7% 5.6% Total $2,623 100.0% $2,416 100.0% 8.6%
Source: IDC Worldwide Quarterly Security Appliance Tracker, March 12, 2015
In addition to the table above, an interactive graphic showing the worldwide revenue share and year-over-year growth of the top 5 security appliance vendors for 2013 and 2014 is available here. Instructions on how to embed this graphic into online news articles and social media can be found by viewing this press release on IDC.com.
Functional Market Results
Traditional Virtual Private Network (VPN) solutions continue to be expensive to roll out and maintain, resulting in a net share loss and a year-over-year revenue decline of -10.2% and -10.0% in unit shipments. Meanwhile, Unified Threat Management (UTM) solutions have experienced double-digit growth since the second quarter of 2013 and 4Q14 continued this trend with the UTM segment posting year-over-year revenue growth of 18.0% and shipment growth of 14.2%. The Intrusion Detection and Prevention (IDP) segment ended the quarter with 16.7% revenue share and the second fastest year-over-year revenue growth of 9.2%. Other solutions, including Content Security and Firewall, ended the quarter with a combined revenue share of 35.0% and year-over-year growth of 0.3%.
IDC’s Worldwide Quarterly Security Appliance Tracker is a quantitative tool for analyzing the global security market on a quarterly basis. The Tracker includes quarterly shipments and revenues (both factory and customer), segmented by vendor, security function, product family, model, region, operating system, and price band.
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