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MARKET AN ALYSIS Worldwide Security Software Forecast, 2003–2007
Christian A. Christiansen Charles J. Kolodgy Brian E. Burke Sally Hudson

F.508.935.4015

IDC OPINION
In light of current economic and industry trends, IDC has updated the forecast for security software revenue for 2002–2006. IDC now expects the worldwide revenue for security software to be $6.9 billion in 2002, an increase of 16.2% from 2001. The market is now forecast to increase to $14.4 billion in 2007, a 16% compound annual growth rate (CAGR) for the period from 2002 through 2007. Highlights are as follows: ! 3A vendors are quickly repositioning themselves as identity management vendors. IDC believes single sign-on (SSO), provisioning, authentication, legacy access management, PKI, security management, and directory services will all be critical components of identity management. Web services represent a whole new model for integrating applications, which means organizations will have to think in a whole new way about security. IDC believes identity management will be the foundation for Web services. ! 2002 proved to be an even more impressive year for the SCM market than IDC forecast in mid-2001. All of the major vendors in the SCM market performed extremely well in 2002. In addition, we believe that many SCM vendors are quietly but successfully increasing the subscription renewal rate with both corporations and consumers, thus generating a more predictable revenue stream. ! 2002 was a down year for the firewall/VPN software market. Although the overall market experienced negative growth, positive growth occurred in Western Europe and the Asia/Pacific region. IDC believes that the firewall/VPN hardware appliances are putting pressure on the enterprise software market. More software vendors are providing their software preinstalled in hardware appliances, which will continue to move the two markets together. ! 2002 provided another strong year for the intrusion detection and vulnerability assessment (ID&VA) market, and strong opportunities continue outside of North America. IDC believes that the intrusion detection market will become one that offers solutions that combine detection with prevention. Enterprises continue to use vulnerability assessment (VA) software to determine their security posture, which is a growing requirement of various government regulations and industry security best practices.

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Filing Information: March 2003, IDC #29137, Volume: 1, Tab: Markets Security Products: Market Analysis

IN THIS STUDY
This study provides a top-down sizing of the security software market in 2002 and a 2003–2007 forecast for this market. Historical and forecast revenue data is shown for the total worldwide market and by geographic region. This study does not contain vendor-specific revenue, market share, revenue by operating environment, or vendor profiles, all of which will be published in a separate study in 2Q03.
M E T H O D O L O G Y

The forecasts presented in this study represent IDC's best estimates and projections based on the following: ! IDC's Operation Beacon III forecast update conducted in the fall of 2002 ! Reported and observed trends and financial activity in 2002 as of the end of January 2003, including reported revenue data for public companies trading on North American stock exchanges (1Q02–3Q02 in nearly all cases, plus 4Q02 where available) ! Additional modeling to fill in any information gaps using a top-down/market-level approach to estimate overall 2002 market sizing ! Bottom-up regional forecast growth rates provided by IDC analysts in each geographic region ! Bottom-up/company-level data collection, which began in February 2003 with indepth vendor surveys and analysis to develop detailed 2002 company models by market, geographic region, and operating environment (This activity will form the basis of vendor-share, updated