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(IQ): Asia- Pacific Network Firewall Vendors, 2014 Table of Contents Frost Industry Quotient (IQ): Asia- Pacific Network Firewall Vendors, 2014 Table of Contents 1. Market Definition & Scope 3 2. Market Assessment 6 Market Size and Forecasts 6 3. Industry Trends 8 Regulatory 8 Technology 9 Competition 10 4. Frost IQ Matrix: Asia-Pacific Network Firewall Vendors, 2014 14 5. Profiles of Network Firewall Vendors 15 5.1 Cisco 15 5.2 Check Point Software Technologies 16 5.3 Juniper Networks 17 5.4 Fortinet 18 5.5 Palo Alto Networks 19 5.6 Beijing TopSec Network Security Technology 20 5.7 Venustech 21 5.8 Neusoft Corporation 21 5.9 Dell SonicWall 22 5.10 WatchGuard Technologies 23 6. The Analyst Word 25 7. Frost IQ Methodology 26 2 frost.com 1. Market Definition and Scope In recent years, the security market has evolved to take on significant challenges to combat cyber criminals. This started with reported breaches in the retail sector, with millions of email addresses and credit card credentials stolen due to advanced persistent threats. Vulnerabilities discovered in legacy SSL encryption technologies, have allowed attackers to take full advantage of these flaws. The network firewall, as the main gateway of all Internet traffic to the trusted network of an organization, thus has a greater responsibility to secure the network from a plethora of security possibilities. These include preventing threats from infiltrating the network to detecting and remediating them should a breach occur. Frost & Sullivan defines the Network Firewall as a product that includes the firewall and/or IPSec VPN on a single platform that can be offered across different form factors (Figure 1). The firewall and IPSec VPN can be defined as: A firewall is a system or group of systems that enforces an access control policy between networks. It includes the features of blocking and/or permitting traffic as pre-determined by the administrator. In recent years, the firewall has integrated more features within the appliance, offering more security services such as application control, web filtering and anti-malware, which belong to the integrated security appliance category. Fundamentally, the firewall solution tracked for this report should have the abilities to conduct stateful or deep packet inspection on Internet traffic, and be able to exist in either software or appliance-based form factors. VPN, or virtual private communication network, exists within a shared or public network platform, i.e., the Internet. VPN uses a shared public infrastructure while maintaining privacy through security procedures and tunneling protocols. Internet Protocol Security (IPSec) is a common protocol used to support secure communication at the IP layer. IPSec VPNs operate at the network layer (layer three) of the Open System Interconnection (OSI) network architecture model. frost.com 3 Figure 1: Key Network Firewall Form Factors Network Firewall Secure Router/ Standalone Software FW/ Integrated Switch + FW/ FW/VPN IPSec VPN Security IPsec VPN Appliance Appliance Source: Frost & Sullivan analysis The dynamism and heterogeneity of the modern-day network environment have contributed to the increased threat exposure faced by organizations across different industries. This has led many businesses to follow the industry trend of transforming their traditional firewalls into multifaceted security platforms that encompass a multitude of security capabilities. Figure 2 shows the relevant market segmentations in enterprise-size and industry-type covered in our research report. 4 frost.com Figure 2: Network Firewall Market Segmentation ENTERPRISE HORIZONTALS Large Business (>500 employess) (large) Small and Medium sized Business (<500 employees) (SMB) ENTERPRISE VERTICALS Banking, Financial Service and Insurance (BFSI) Goverment Network Manufacturing Firewall Market Education Segmentation Others (includes pharmaceuticals, retail, logistics, oil and gas, energy, mining, agriculture, IT/IT Enables Service (ITes), and Business process outsourcing (BPO)) SERVICE Managed PROVIDER Internal Resell Source: Frost & Sullivan analysis frost.com 5 2. Market Assessment: Size and Forecast The Asia-Pacific network firewall market (Figure 3) is expected to grow at a CAGR of 8.4% over the forecast period from 2013 to 2020, and is forecasted to reach a total market size of US$3 billion in 2020. Greenfield firewall opportunities are predicted to grow at new data centers, critical infrastructures and cloud platform requirements in the near future. This is likely to be followed by a slowdown in growth as the market matures and witnesses more renewals or upgrades of firewalls to meet higher security and throughput demands. Across the Asia-Pacific, the retail and hospitality industries in particular, have seen a growing demand for newer, integrated firewalls offering advanced capabilities to mitigate Advanced Persistent Threats (APTs). Throughout 2014, these industry segments encountered major security breaches in the United States, most notably the credit card breach at US retail giant Target. This has led to rising concerns about cyber security in the Asia-Pacific market. Due to the complexity of managing distributed networks, and budgetary issues, integrated firewalls with sandboxing technologies are likely to become the preferred model in the long run. In fact, security vendors have started to incorporate these features in their existing product platforms. The rapid evolution of the Internet of Things (IoT) is accelerating new demand for network firewalls to look at securing critical infrastructure and providing cyber security for operational systems, as they start connect to the Internet to improve overall business efficiency. Asia-Pacific countries investing heavily in the creation of new energy, manufacturing and industrial plants will also need to incorporate network firewalls as part of their design and implementation. This is to take advantage of what the Internet protocol can bring in network standardization and aid in supervisory control and data acquisition (SCADA) requirements. Form factor requirements for protecting operational technologies will thus be critical components in security design and implementation. Healthcare and transport 6 frost.com companies are also actively looking at IoT initiatives that have resulted in more network transformation requirements moving forward. High growth in these industries is expected as they source for new network security requirements to handle greater capacities in connections due to the surge of more Internet-based sensors that need to be monitored. Robust adoption of cloud computing among enterprises, coupled with the emergence of Software-Defined Networking (SDN), are slated to herald in the next phase of form factors that network firewalls will need to adapt to, be it to offer compatibility with the latest SDN protocols, or as virtualized versions used on Network Function Virtualization (NFV) platforms. The trend towards designing and building Software-Defined Datacenters (SDDCs) will continue to be the major direction firewall vendors take to develop new products to meet market demand in the years to come. Figure 3: Network Firewall Market Sizing and Forecast, 2013-2020 Growth Rate (%) Growth Revenues ($ Million) Note: All figures are rounded. The base year is 2013. Source: Frost & Sullivan analysis frost.com 7 3. Industry Trends Regulatory A new paradigm shift in IT security is starting to emerge as enterprises begin to accept the possibility that their organizations may be breached, even after they have invested significantly in security technologies to prevent such incidents from happening. As a result, more enterprises are looking beyond a preventive approach, to detection and remediation capabilities as part of their overall security strategy. Many are also seeking assurances in the form of having the ability to detect and remediate as soon as prevention tools fail, and a security breach occurs. To this end, a certain level of forensics, aided by the visibility provided by the network firewall, is increasingly needed to detect the root cause of the breach, as well as devise countermeasures to be implemented, to ensure the same breach does not recur. This attitudinal shift has seen more security vendors introduce products and services related to detection and remediation in their portfolios. Regulations in the payment card industry (PCI), usually referred to as the PCI-DSS standard, have driven the retail and hospitality industries to adopt network firewalls with adequate features to meet these standards, and provide required reporting and visibility to comply with auditing requirements. Due to the nature of the industry, which requires multi-site deployments, it is observed that integrated security appliances are fast becoming the preferred choice, due to their ease of management and fast implementation. Moreover, mandating PCI-DSS has led to stronger adoption of PCI- DSS-compliant network firewalls, especially in markets where consumers are actively moving towards cashless transactions. Recent regulations in Mainland China have also shed the spotlight on cross-border sensitivities inherent in the IT security market. China’s prohibition of non-local vendor products for government and related organizations has created new challenges for global network firewall vendors, many of which are based in the US. The regulations rolled out by the Chinese government this year has seen local vendors catering to 8 frost.com requirements of Web Application Firewalls (WAFs) and combating APTs, either through technology acquisitions
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